Compal Electronics Inc (仁寶電腦) yesterday said it expects artificial intelligence (AI) servers to account for 30 to 40 percent of revenue next year, up from about 10 percent this year, as it expands production capacity in Taiwan, the US and Vietnam.
In the first quarter, server revenue was NT$10 billion (US$309.8 million), accounting for 5 percent of the company’s revenue, Compal chairman Ray Chen (陳瑞聰) told reporters as the company inaugurated its new plant in Taoyuan.
“We are targeting triple-digit annual growth for our AI-related business this year and next year,” Chen said.
Photo: CNA
The new plant would serve as a key site for Compal’s AI server research, development and production, featuring fully automated production lines for Level 10 (L10) AI server systems and Level 11 (L11) server racks, Chen said.
It should start contributing revenue from next quarter, he said.
Amid strong demand for AI servers, Compal expects the new plant to reach full utilization as early as the second half of next year, Chen said.
The company is evaluating AI server capacity expansion in Taoyuan, although the location and scale have yet to be determined, he added.
Compal’s AI server business remains focused on L10 products, with shipments mainly to neocloud customers such as GMI Cloud and Verda, while L11 shipments are slated to begin next quarter, he said.
Alongside expansion in Taiwan, Compal is increasing AI server capacity in Vietnam and Texas, Chen said.
In Vietnam, where Compal mainly handles Level 6 (L6) server node production, the company operates four surface-mount technology lines and plans to add another six, with construction of its second factory nearing completion, he said.
Compal is building two plants in Taylor and Georgetown, Texas, focused on the production of L6, L10 and L11 models. Trial production is slated to begin next quarter, followed by mass production in the first quarter of next year, Chen said.
The company had planned to ship some L6 products from Vietnam to Texas for assembly, but is adding L6 capacity in Texas as some US customers seek more localized production, he said.
The move would allow Compal to handle production from L6 through L11 rack-level integration in Texas, he said.
The Texas plants would mainly serve US hyperscalers and enterprise customers, while Taiwan primarily serves neocloud customers, Chen said.
The PC industry faces headwinds this year from tight DRAM supply and rising component costs, with International Data Corp forecasting global PC shipments to fall 10 to 12 percent year-on-year.
Chen said DRAM supply is likely to remain tight next year, but rising component costs are pushing up average selling prices, meaning Compal’s PC revenue might not fall at the same pace as shipments.
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