Delta Electronics Inc (台達電) on Thursday gave an optimistic forecast for this quarter and this year, driven by rising demand for its power and thermal management products amid artificial intelligence (AI) infrastructure deployments.
Gross margin this quarter is to expected to surpass the 35.51 percent registered for the second quarter last year, supported by a larger revenue contribution of its AI-related products, Delta Electronics chairman Ping Cheng (鄭平) said at an earnings conference in Taipei.
Products shipped to the world’s major cloud service providers for their data centers usually carry a higher margin than to other customers, boosting overall profitability, Cheng said.
Photo: Fang Wei-chieh, Taipei Times
Revenue this quarter is expected to surpass the first quarter due to improved demand based on a normal seasonal pattern, driven by rising shipments of power products, Delta vice president Lanford Liu (劉亮甫) said.
The robust growth momentum for the company’s core products are fueled by heavy capital spending by the world’s major cloud service providers, who are forecasting a 60 percent annual jump to US$670 billion this year, Liu said.
For next-generation servers, Delta is focusing on upgrading power architectures by providing high-voltage direct current (HVDC) solutions, with its ±400-volt HVDC products expected to begin mass shipments this year due to faster adoption, he said.
Meanwhile, 800-volt HVDC architecture is being developed alongside Nvidia Corp’s next-generation AI platforms, with volume production slated for next year, Liu said.
The architecture is expected to be deployed in next-generation rack designs such as Nvidia’s Kyber power rack, he said.
In the thermal management business, liquid-to-air solutions generated more than US$1.6 billion in revenue last year and are expected to continue growing this year, he said.
Although the transition to liquid-to-liquid technologies has been slower than expected, ongoing data center upgrades are supporting steady improvements to liquid cooling, Liu said.
As AI server power architectures move toward modularization, Delta is also expanding into power racks and battery backup units, Cheng said.
To meet rapidly growing AI demand, Delta is expanding its global production footprint, strengthening research and development in Taiwan, while ramping up capacity in Thailand, he said.
The company is also building new facilities in the US, and optimizing operations in China and India for its power and infrastructure business, he said.
Net profit last quarter grew 19 percent quarter-on-quarter and 102 percent year-on-year to NT$20.55 billion (US$649 million), driven by continued strong demand.
Earnings per share increased to NT$7.91 from NT$6.67 in the previous quarter, and up from NT$3.94 a year earlier.
Gross margin increased to 37 percent from 34.6 percent in the previous quarter.
Power electronics products accounted for 54 percent of Delta’s total revenue of NT$159.4 billion last quarter, followed by infrastructure products at 32 percent, automation devices at 9 percent and mobility applications at 5 percent.
AI-related products are expected to contribute more than 20 percent of the company’s revenue this year, Delta said.
Capital expenditure this year is expected to grow by at least 10 percent from last year’s NT$46.1 billion to support the company’s AI and data center product lines, Cheng said.
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