Electronics manufacturer Pegatron Corp (和碩) yesterday said it is considering setting up a new server plant in the US to cope with rising demand for artificial intelligence (AI) servers in North America and to mitigate the impact of US tariffs.
The company, one of Apple Inc’s iPhone assemblers, has diversified into the server business in the past two years and is forecasting growing server shipments in the second half of this year over the first half, Pegatron cochief executive officer Gary Cheng (鄭光志) told reporters after the company’s annual shareholders’ meeting.
In response to such an increase in demand, Pegtron is considering setting up new factories in North America, Cheng said.
Photo: CNA
“When we talk about setting up North American bases, we are not limiting those manufacturing sites to Mexico. The US would be included as well,” Cheng said.
Asked whether Texas is on the company’s short list to build a new factory, Cheng said the company would make a decision later this month at the earliest.
The plan would be subject to the approval of the board of directors, he said.
Pegatron is weighing several factors when deciding the matter, including land availability, electricity rates and labor costs, he added.
Pegatron set up a manufacturing base in Mexico last year, with mass production of servers expected to begin in the third quarter, Cheng said.
“We are considering how to access electricity in the shortest time and at the lowest cost, and would not choose a remote location — likely somewhere where many of our peers have already set up factories,” he said.
The outlook for the server business in the second half of this year remains conservative, given tariff uncertainties and the front-loading effect in the first half, Cheng said.
Many clients have requested early shipments to the US after US President Donald Trump unveiled a 90-day pause of his “reciprocal” tariffs on April 2, leading to stronger-than-expected server shipments in the first half, he said.
Aside from its AI server product lines, Pegatron has also expanded into the electric vehicle market in collaboration with chipmaker NXP Semiconductors NV, Cheng said.
The company expects to launch new products with an automaker by the end of this year at the earliest, he said.
Pegatron supplies onboard computers, engine-control units and charging piles.
In response to a question about the impact of the sharp appreciation of the New Taiwan dollar, cochief executive officer Johnson Teng (鄧國彥) said the company has implemented hedging rules, given that a majority of its payments and revenues are in US dollars.
Pegatron shareholders approved a cash dividend of NT$4.5 per share, the highest since 2022. That represented a payout ratio of 70.97 percent based on the company’s earnings per share of NT$6.34 last year.
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