Global shipments of servers decreased in the first half of the year due to relocation of production lines for data centers, Taipei-based market researcher TrendForce Corp (集邦科技) said in a report yesterday, as it predicted a decline in server shipments in China this year.
While original design manufacturers (ODM) have since last year been moving their production lines out of China due to its escalating trade dispute with the US, the relocation process has nonetheless affected the entire supply chain for servers, the researcher said.
This has resulted in sluggish demand from the data center market in the first six months of this year, which was further dampened by the unresolved US-China trade dispute, TrendForce said.
“ODM partners of Microsoft Azure, Google and a few other cloud service providers in the US have moved their L6 [level 6] lines to Taiwan as requested by their clients. The issue is that the production yields from these lines have dropped following their relocation, leading to downward corrections in shipments,” TrendForce senior analyst Market Liu (劉家豪) said in the report.
LOW YIELDS
The yields of the relocated L6 lines would not return to their normal levels until the end of this year or next year, Liu said.
However, server shipments for Amazon Web Services, Amazon.com Inc’s cloud computing arm and Facebook Inc are expected to remain steady, despite production lines remaining in China, as the companies are willing to absorb the costs associated with higher US tariffs, Liu added.
TrendForce also predicted that total annual server shipments in China this year would decline by 4 percent year-on-year due to the US’ export restrictions on several major Chinese data center suppliers, including Huawei Technologies Co (華為) and Dawning Information Industry Co (中科屬光), which is also known as Sugon.
However, Chinese server maker Inspur Group Ltd’s (浪潮集團) shipments are expected to increase 10 percent on an annual basis by the end of the year, as the company benefits from transfer orders, since most of the companies that build and operate large-scale data centers still use China-made servers.
AI SPLURGE: The four major US tech companies have lost more than US$950 billion in value since releasing earnings and outlooks, while equipment makers were gaining Four of the biggest US technology companies together have forecast capital expenditures that would reach about US$650 billion this year — a flood of cash earmarked for new data centers and all the gear within them. The spending planned by Alphabet Inc, Amazon.com Inc, Meta Platforms Inc and Microsoft Corp, all in pursuit of dominance in the still-nascent market for artificial intelligence (AI) tools, is a boom without a parallel this century. Each of the companies’ estimates for this year is expected either near or surpass their budgets for the past three years combined. They would set a high-watermark for capital spending
China’s top chipmaker has warned that breakaway spending on artificial intelligence (AI) chips is bringing forward years of future demand, raising the risk that some data centers could sit idle. “Companies would love to build 10 years’ worth of data center capacity within one or two years,” Semiconductor Manufacturing International Corp (SMIC, 中芯) cochief executive officer Zhao Haijun (趙海軍) said yesterday on a call with analysts. “As for what exactly these data centers will do, that hasn’t been fully thought through.” Moody’s Ratings projects that AI-related infrastructure investment would exceed US$3 trillion over the next five years, as developers pour eye-watering sums
Bank of America Corp nearly doubled its forecast for the nation’s economic growth this year, adding to a slew of upgrades even after a rip-roaring last year propelled by demand for artificial intelligence (AI). The firm lifted its projection to 8 percent from 4.5 percent on “relentless global demand” for the hardware that Taiwanese companies make, according to a note dated yesterday by analysts including Xiaoqing Pi (皮曉青). Taiwan’s GDP expanded 8.63 percent last year, the fastest pace since 2010. The increase “reflects our sustained optimism over Taiwan’s technology driven expansion and is reinforced by several recent developments,” including a more stable currency,
COLLABORATION: Taiwan and the US could jointly find solutions to weaknesses in supply chain resilience for critical materials, focusing on mining and initial refinement Taiwan is likely to purchase rare earths from the US in the future, and is also in talks with Australia and Canada to strengthen global rare earth supply chain security, Minister of Economic Affairs Kung Ming-hsin (龔明鑫) said yesterday. Taiwan and the US last month concluded the sixth Economic Prosperity Partnership Dialogue, during which both sides signed a joint statement endorsing the principles of the Pax Silica Declaration, pledging to deepen cooperation in areas including critical minerals. At the time, Kung said the two sides would establish working groups to advance cooperation in areas including artificial intelligence, digital infrastructure, critical materials and
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