Pegatron Corp (和碩) yesterday said it plans to build a new server manufacturing factory in the US this year to address US President Donald Trump’s new tariff policy.
That would be the second server production base for Pegatron in addition to the existing facilities in Taoyuan, the iPhone assembler said.
Servers are one of the new businesses Pegatron has explored in recent years to develop a more balanced product lineup.
Photo courtesy of Pegatron Corp via CNA
“We aim to provide our services from a location in the vicinity of our customers,” Pegatron president and chief executive officer Gary Cheng (鄭光治) told an online earnings conference yesterday. “We will be able to ramp up production this year.”
Pegatron moved ahead of its rivals in delivering the first artificial intelligence (AI) server racks powered by Nvidia Corp’s GB200 chips in January for a customer’s verification, boding well for the company to win orders in the second half of this year, Cheng said.
The customer is a medium-sized cloud service provider in the US, he said.
The company has also secured two new orders to supply general-purpose servers, Cheng said.
Capital expenditure this year is expected to exceed its original plan of between US$300 million and US$350 million, with most of the money spent on new equipment for overseas manufacturing facilities, the company said.
Pegatron president and chief executive officer Johnson Teng (鄧國彥) said Trump’s tariff policy has prompted the company to boost its capital expenditure and force it to ship a majority of products to the US from non-China sites.
The company has in recent years expanded its manufacturing footprint to Vietnam, India and Mexico to meet customers’ needs, he said.
Pegatron, which counts Tesla Inc as its first customer in the electric vehicle (EV) segment, has made breakthroughs in securing more customers for EV components such as engine control units, on-board computers and charging piles, with some products destined for new customers from this year, it said.
Despite uncertainty over Trump’s tariff threats, the company is confident about delivering “decent results” this year, thanks to an improving global economy, increases in new applications for AI PCs and uptakes of new wireless technologies such as Wi-Fi 7 and new 5G technologies, Teng said.
The company expects shipments of computing products this quarter to decline by a single-digit percentage point due to seasonal weakness, Teng said.
The seasonal factors would also curtail demand for consumer electronics and consumer products, he said.
The company also expects the second quarter to be flat compared with the first quarter, or slightly improve, thanks to replacement demand for computers, Teng said.
Last year as a whole, Pegatron’s net profit rose 7.4 percent to NT$19.15 billion (US$581 million), compared with NT$15.71 billion the previous year. Earnings per share increased to NT$6.34 from NT$5.9 and gross margin improved to 4.1 percent from 3.7 percent.
Revenue last year contracted 10.5 percent to NT$1.13 trillion from NT$1.26 trillion in 2023, with communication products, mainly iPhones, accounting for more than 60 percent.
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