Power supply and electronic components maker Delta Electronics Inc (台達電) yesterday said that it is optimistic about revenue this quarter and for the full year, as artificial intelligence (AI) infrastructure continues to drive demand for its power and thermal management products.
While the first quarter is typically a slow season due to the Lunar New Year holiday, the impact is expected to be milder this year as AI data center power products account for a growing share of revenue, Delta Electronics chairman Ping Cheng (鄭平) said at an earnings conference in Taipei.
Shipments of power products this quarter could be flat or increase slightly from last quarter, while those of cooling products are expected to decline from last quarter due to seasonality, the company said.
Photo courtesy of Delta Electronics Inc
Demand for Delta’s products used in AI data centers is expected to remain strong this year, with shipments likely to grow steadily in the following quarters if major cloud service providers (CSPs) execute their capital expenditure plans on schedule, Delta vice president Lanford Liu (劉亮甫) said.
However, data center construction still faces multiple constraints, including the availability of land, water and power supply, and labor shortages, all of which could pose uncertainties for Delta’s shipments, Cheng said.
A persistent shortage of memory chips is another uncertainty that could affect customers’ data center construction, he said.
Delta’s net profit last quarter fell 7 percent quarter-on-quarter, but surged 141 percent year-on-year to NT$17.3 billion (US$553.6 million), driven by continued strong demand from CSPs.
Earnings per share decreased to NT$6.67 from NT$7.16 in the previous quarter, but were up from NT$2.76 a year earlier.
Gross margin fell to 34.6 percent from 34.9 percent the previous quarter, and operating margin also fell to 16.35 percent from 16.5 percent.
Power electronics products accounted for 50 percent of Delta’s revenue of NT$161.61 billion last quarter, followed by infrastructure products at 37 percent, automation devices at 9 percent and mobility applications at 4 percent.
Total revenue last year rose 32 percent year-on-year to NT$554.9 billion, with AI-related power supply units accounting for more than 20 percent, while AI-related cooling and heat-dissipation solutions made up about 9 percent, Cheng said.
To ease capacity tightness driven by strong AI demand, the company started operating three new plants in Thailand last quarter, he said.
Delta is planning to expand its capacity in Thailand, India and the US, and has visited Mexico to gauge potential future investment there, he said.
As the electric vehicle (EV) market is expected to remain subdued over the next one to two years, Delta has decided to consolidate its EV production in Thailand from two plants to one, with the freed capacity to be reassigned for power supply products, Cheng said.
Delta spent NT$46.1 billion on capital expenditure last year and plans to increase its spending this year to support its AI and data center-related product lines, he said.
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