Quanta Computer Inc (廣達) yesterday said artificial intelligence (AI) server revenue this quarter would continue to grow by a double-digit percentage sequentially, after server revenue last quarter increased by 30 percent quarter-on-quarter and accounted for 75 percent of total server revenue.
Servers accounted for 80 percent of Quanta’s first-quarter revenue, which increased 66.6 percent year-on-year to NT$809.22 billion (US$25.68 billion), a record quarterly high, the company said.
The company has become more optimistic about the AI server market compared with three months ago, as major cloud service providers now have clear order visibility through 2028, Quanta chief financial officer Elton Yang (楊俊烈) said at an earnings conference.
Photo courtesy of Quanta Computer Inc
Quanta maintains a triple-digit growth forecast for AI server revenue this year, as some orders shift to “consignment” transactions from previous “buy-and-sell” arrangements, Yang said.
High-priced AI server racks can significantly boost revenue, but weigh on margins under the buy-and-sell transactions, he said.
Quanta has negotiated with customers to shift toward consignment deals to lift margins, and expects some orders under consignment trades to start in the second half of this year, he added.
While the transition between AI servers powered by Nvidia Corp’s GB300 and GB200 platforms also weighed on margins due to higher component costs, the impact is expected to ease this quarter as the share of the GB300 platforms increases, Yang said.
Quanta also expects more shipments of servers powered by application-specific integrated circuits this year to help improve product mix and margins, he said.
As for general-purpose servers, shipments this quarter are expected to grow further and full-year shipments are predicted to show double-digit annual growth, he added.
Notebook computer sales this quarter are said to be flat or slightly higher than the previous quarter, Quanta said, after accounting for less than 15 percent of total revenue last quarter.
The company allocated NT$8 billion for capital expenditure in the first quarter to expand AI capacity in the US and Thailand.
The figure is expected to rise to NT$30 billion this year, as the company aims to double its AI-related capacity this year from last year, he said.
Quanta’s board of directors yesterday also approved injecting US$800 million into three wholly owned overseas subsidiaries, mainly for its US expansion, the company said.
The company’s net profit in the first quarter increased 8.7 percent year-on-year, but fell 4.5 percent quarter-on-quarter to NT$21.19 billion. Earnings per share rose to NT$5.5 from NT$5.06 a year earlier, marking a record high for the period, but slipped from NT$5.76 in the previous quarter. Gross margin fell to 4.78 percent from 7.92 percent a year earlier and 6.33 percent in the previous quarter.
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