Taiwan continues to capitalize on opportunities for contract manufacturing of cutting-edge technology products as the trade disputes between the US and China intensify. The unrestricted access to the most advanced equipment and materials in the semiconductor industry enables Taiwan to produce products that are unparalleled in terms of technological advancements.
On November 14, Foxlink Group (formerly Cheng Uei Precision Industry) inaugurated Ubilink, establishing Taiwan's largest AI supercomputing center and first platform utilizing Nvidia Hopper GPUs. The center aims to serve small and medium-sized enterprises (SMEs) that cannot afford dedicated computing facilities.
Taiwan-based server original design manufacturers (ODMs) anticipate a significant surge in AI server sales by 2025. However, the rapid increase in sales has led to higher accounts receivable and inventory levels, making financial endurance crucial for these companies.
Hon Hai Precision Industry (Foxconn) held its third quarter online earnings call on November 14, during which chairman Young Liu highlighted record-breaking cumulative revenue, gross margin, operating profit, and net profit compared to previous years, despite operational challenges. Growth is expected to continue into the fourth quarter and 2025, driven by traditional peak season demand and AI servers.
Kaori Heat Treatment Co. approved the formation of a wholly-owned subsidiary focused on thermal solutions at an extraordinary shareholders' meeting on November 12, transferring its thermal energy division to the new entity, Kaori Thermal Technology. The restructuring aims to enhance operational efficiency and strengthen the group's positioning in the growing artificial intelligence infrastructure market.
Acer subsidiary AOpen achieved its highest profits in 22 years during the third quarter of 2024. The company attributes this growth to long-term efforts in various markets and customer relationships, which have stabilized following the pandemic. There has also been a noticeable increase in shipments for certain projects in Europe and the US in the second half of the year.
Taiwan's leading precision metal stamping specialist, G-Shank Enterprise, reported that revenue from non-3C applications—such as automotive, medical, and industrial sectors—grew to 56% in the first three quarters of 2024. This diversification fueled both revenue and profit growth for the company, while AI-related applications will serve as the primary growth driver in 2025, according to President Ying-Shou Lin.
Pegatron is poised to expand its server operations significantly, with initial results from its automotive and server businesses expected to materialize in 2025. Despite being a relative newcomer in the server market, Pegatron emphasizes that after two years of building fundamentals, it anticipates reaping the fruits of its earlier labor next year. While focusing on the three leading cloud service providers (CSP), the company is also pursuing orders from second and third-tier CSPs and enterprise customers. Additionally, it has secured orders from a major semiconductor company in Taiwan, with the project in its final verification stage and shipments scheduled to begin in the first quarter of 2025.
Power management IC (PMIC) specialist Silergy has seen growth in the third quarter of 2024 compared to last year, which chairman Wei Chen attributes to the end of inventory adjustments at its communications-related customers, and a steady inflow of orders across all of the company's new product segments, particularly in the automotive business.
Wiwynn has reported record-breaking revenue and profit for the third quarter of 2024 and is expanding production capacity to keep up with future growth. The company announced it would invest up to NT$1.52 billion (approx. US$47 million) to acquire the leased manufacturing facility in the Luzhu facility of Tainan Science Park, which was originally owned by Tongtai Machine & Tool Co., Ltd., to meet operational needs. Furthermore, the company's motherboard production at its Malaysian plant has also commenced in the fourth quarter.
AI servers are proving to be a vital revenue driver for major ODMs. Quanta's October revenue surged to NT$135.9 billion (approx. US$4.24 billion), setting a new record for the period with a 48.7% year-over-year increase. Wistron followed suit, reporting NT$96.3 billion in revenue, up 22.8% from the previous year.
On November 12, Compal released its third-quarter financial report, showing revenue growth in PCs, wearables, and automotive electronics from the prior quarter, with other product lines remaining stable. The company's gross profit margin rose to 5.01%, reaching the 5% threshold for the first time in 13 years and increasing by 0.6 pp year over year, driven by an optimized product mix and a larger share of high-margin products.
Audix Group chairman and president Yuan-kai Chung anticipates significant tariff changes in the US-China trade war once US President-Elect Trump assumes office. Additionally, overcapacity in China is expected to drive more aggressive price competition.
The rise of ChatGPT and other AI applications has driven IT companies to develop their own AI chips and servers, to meet the growing needs of both cloud-based services and edge devices. Recent reports suggest that Apple may be enlisting Foxconn's help to produce its own AI servers in Taiwan; although neither company has commented on these rumors, sources in the server supply chain note that Apple partnering with Foxconn on such a project would be an expected development, but other concerns will dictate whether production will take place in Taiwan.
As artificial intelligence (AI) demand grows and recent financial issues at Supermicro trigger order redistribution, passive component manufacturer Podak sees new opportunities. Chairperson Chia-Yu Chen reports that clients are experiencing increased orders from AI-related applications, helping to offset declining PC market demand. For 2025, Podak expects AI-related revenue to grow by up to 15%, though the company maintains a cautious outlook and anticipates stable operations throughout the year.
YTL Group, Malaysia's largest conglomerate, has reportedly redirected its AI server orders from Supermicro to Wiwynn, a Wistron subsidiary, amid growing market attention on Supermicro's pending annual report. The order originally specified Supermicro's GB200 server racks for YTL's planned AI data center in Malaysia. Neither company has commented on the development.
AI, biomedicine, quantum computing, innovative semiconductor materials, and advanced semiconductor manufacturing are shaping up as pivotal areas for Taiwan's future research and development, with profound implications for defense and industry applications. This critical juncture was highlighted by Professor Chuu Chih-sung's groundbreaking creation of the world's smallest quantum computer at National Tsing Hua University's Department of Physics and Center for Quantum Technology.
With Donald Trump now set to return to the White House, industry players will be keenly watching his upcoming policies, given his previous strong-arm tactics and campaign rhetoric on industrial development. Much attention has centered around Foxconn in particular, as its investment project in Wisconsin was a topic of scrutiny on the campaign trail, and with the company's involvement in the booming AI industry, its responses will serve as a key indicator for the industry in general.
Weltrend Semiconductor, a specialist in USB power delivery (PD) controller chips, anticipates strong AI server demand to drive its shipment performance in the fourth quarter of 2024.
Recent negative media coverage of US AI server companies ZT and Supermicro, both Nvidia clients, has raised supply chain concerns. Sources suggest that transferring AI server orders is a complex process that cannot be done overnight.
Following Donald Trump's re-election, industry observers are monitoring potential policy impacts across sectors. Advantech, a global leader in industrial PC (IPC), announced it is evaluating US-based manufacturing. The company anticipates North America will become a key growth region in the coming years.
Following Donald Trump's re-election as US President, concerns are mounting over potential new tariffs on the server supply chain. Mike Yang, EVP and GM of Cloud Computing at Quanta Computer, emphasized the company's global footprint with manufacturing plants in the US, Thailand, Europe, Taiwan, and China, underscoring that additional factories may not be necessary at this time. Production capacity will be flexibly scaled to align with customer demand.
Adata reported October 2024 revenue of NT$34.1 billion (approx. US$1.06 billion), driven by increased DRAM shipments. The company is nearing its 2023 revenue performance and targets NT$40 billion for 2024. Adata expects strong demand for HBM and server memory, with growth anticipated in AI-related applications by 2025.
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