Inventec's AI server shipments in 2024 are predicted to more than double compared to 2023, according to Jack Tsai, president of the Taiwan-based ODM. Tsai noted the increased average unit cost of AI servers will also result in a more pronounced revenue contribution.
Nonetheless, Tsai added that 2024 will be a challenging year due to the volatility of market conditions. The only certainty is that the future of the AI market is bright.
Inventec expects a small single-digit revenue gain this year, but AI server sales will account for a double-digit percentage of revenue in 2024, up from 5-6% last year, Tsai indicated.
Inventec reported a 5% revenue decrease in 2023 compared to 2022, and the company believes it outperformed most other contract electronics companies, which experienced revenue declines of more than 10% year on year. In terms of products, Inventec saw notebook sales level off from the previous year, while server sales dropped 8%.
The economy was dismal in 2023, according to Tsai, and numerous corporations had initiated layoffs. Although the AI server business expanded dramatically, general-purpose server shipments were limited by poor macroeconomic conditions.
Inventec's overall shipments fell in 2023, and the company had expected the performance to recover in 2024. However, as evidenced by the ongoing wave of layoffs by major international corporations. Tsai indicated Inventec is unsure of what will happen next.
According to Inventec's current forecasts, notebook sales will rise by a single digit year-on-year in 2024, while server sales will expand by double-digit percentages in 2024. Although growth in general-purpose shipments is anticipated to be stagnant, the double-digit increase will be propelled by AI servers.
Regarding the introduction of AI PCs, Tsai believes 2024 will be the gestation period, with more evident growth from 2025 to 2026.
Automotive to boost new business
Inventec chairman Sam Yeh predicts that automotive will be the fastest-growing of the group's developing industries. Since its debut in 2017, Inventec's automotive business has steadily grown. It is expected to expand fast in 2024, with product breakthroughs scheduled for 2025 and 2026.
Yeh added that by 2027, Inventec expects to generate NT$100 billion (US$3.2 billion) in automotive revenue.
Inventec's annual revenue has exceeded NT$500 billion in the past three years. According to market observers, if the automobile business achieves NT$100 billion, its sales proportion will be 10-20%, with the potential to become the group's third-largest business.
Inventec's notebook sales accounted for 54% of total revenue in 2023, followed by server sales at 40% and smart devices at 5-6%.
Subsidiary IAC expects double-digit growth
Inventec Appliances (IAC), a consumer electronics manufacturing subsidiary of Inventec, expects double-digit revenue growth in 2024. In addition to gaming and audio-related devices, IAC's 5G products are expected to grow.
IAC also began shipments for smart speakers with AI processors to a US customer at the end of 2023, with shipment prospects favorable, according to David Ho, who was recently elevated from president to chairman.
In addition, in response to geopolitical tensions between China and the US, IAC's customers are diversifying their manufacturing base. Inventec is currently targeting Vietnam and Malaysia, Ho indicated. In Malaysia, IAC established a local production facility 30 years ago and is familiar with Penang, which has a strong acoustic sector.
IAC's factory site in Vietnam manufactures wearable devices, Ho noted. In Taiwan, the company makes mainly 5 G-related products for US customers, according to Ho.
