Quanta Computer Inc (廣達), which supplies artificial intelligence (AI) servers powered by Nvidia Corp’s chips, yesterday said it would boost capital expenditure this year by about 40 percent to NT$20 billion (US$660.4 million) from NT$14.2 billion last year to keep pace with growing server demand from customers including the world’s major cloud service providers (CSPs).
The company said its capital spending in the first quarter swelled about 80 percent to NT$4.7 billion from NT$2.6 billion in the corresponding period last year.
Quanta said it is seeing CSPs maintain heavy investment in AI servers and data center infrastructure.
Photo courtesy of Quanta Computer Inc
The recent capital expenditures guidance from top US hyper-scalers confirmed that they are either maintaining or raising capital expenditure for AI devices this year, it added.
Top CSPs said they are increasing capital expenditure, albeit at a slower pace, and “that’s why we are saying the demand is still there,” Quanta chief financial officer Elton Yang (楊俊烈) told an online conference.
However, shipments of AI server racks would still be subject to the availability of chips, Yang said.
Quanta said it started ramping up production of new AI servers based on Nvidia’s GB200 chips late last quarter, but supply constraints of chips and other components are curbing output.
For the current quarter, Quanta expects demand for GB200-based servers to outpace that for servers powered by Nvidia’s previous-generation Hopper-series chips.
As a result, AI server revenue contribution this quarter would be higher than the 60 percent of total server revenue last quarter, as the company is on track to hit the 70 percent target this year, Quanta said.
However, rising demand for new-generation AI servers is expected to squeeze gross margin going forward, after it improved to 7.92 percent last quarter from 7.45 percent the previous quarter.
Gross margin was 8.48 percent in the first quarter last year, the company said.
Servers have become the largest revenue source for Quanta, accounting for about 70 percent of its total revenue last quarter. Notebook computers’ revenue share dropped to less than 25 percent, it said.
Quanta expects notebook shipments to expand by at least a high-single-digit percentage this quarter from 10.8 million units last quarter, thanks to front-loading demand from customers during the 90-day pause on US tariffs.
That might lead to a “muted” seasonal demand in the second half of this year, Quanta said.
Quanta said its operating margin could be under pressure, as it is boosting research-and-development spending in preparation for the production of next-generation AI servers powered by GB300 chips, adding that operating expenses surged 35.4 percent annually to NT$13.88 billion last quarter.
The company’s net profit in the first quarter hit the highest in the company’s history at NT$19.5 billion, surging 61.6 percent annually from NT$12.07 billion, or sequential growth of 22.8 percent from NT$15.87 billion.
Earnings per share rose to NT$5.06 from NT$3.13 a year earlier and from NT$4.12 a quarter earlier.
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