According to a report by Economic Daily News, Supermicro’s ongoing financial crisis has reportedly led to the suspension of its planned expansion at its Malaysia facility, which was set to double its production capacity. This disruption has prompted Supermicro’s major client, Malaysia’s largest conglomerate and a top NVIDIA AI server buyer, YTL Group, to shift its substantial AI data center order.

The same report indicates that YTL Group is now turning to Wistron Group’s Malaysian subsidiary, Wiwynn, for nearby support to fulfill the order, which involves substantial deliveries of NVIDIA’s high-end GB200 NVL72 full-rack servers.

Industry insiders cited by Economic Daily News previously speculated that NVIDIA would lead any order reallocation; however, this shift originates from Supermicro’s client, YTL Group, whose choice of Wiwynn is strategic. Wiwynn’s plant is situated near Supermicro’s new facility in Malaysia, offering a geographical advantage and boasting robust AI server capabilities.

YTL Group has strong ties with NVIDIA. In March, YTL Power, a subsidiary of YTL Group, announced a partnership with NVIDIA to install DGX GB200 NVL72 AI server systems, aiming to establish a green AI data center in Johor, Malaysia.

Originally, YTL’s sizable AI data center project was to be shared between Supermicro and Wiwynn. Supermicro’s Johor plant was expected to double capacity with a new line in Q4, but this plan has been delayed due to financial issues. Wiwynn’s nearby plant has also been expanding, enhancing its one-stop manufacturing services and adding advanced cooling technologies such as direct liquid cooling and immersion cooling to handle the redirected order.

Supermicro CEO Charles Liang, speaking at COMPUTEX 2024, previously unveiled the company’s ambitious Malaysia expansion, aiming to double its output to 10,000 server racks per month by Q4. With the expansion now halted, orders have shifted to Wiwynn.

Wiwynn’s new plant in Johor began assembling server racks last October, and a second phase focusing on motherboard production is expected to go online later this year, with potential plans for a third plant.

Economic Daily News reports that Johor, Malaysia’s largest data center investment hub and the ninth-largest in the Asia-Pacific, currently hosts 13 data centers, with four more under construction. The region’s affordable land, water, and power resources, along with its proximity to Singapore, have drawn multinational companies such as Australia’s AirTrunk and Microsoft, which recently acquired land in Johor for a new data center.

(Photo credit: YTL Power)

According to a report from TechNews, citing Nikkei, Apple is reportedly in talks with Foxconn to manufacture AI servers in Taiwan as part of its strategy to capture a larger share of the booming generative AI market.

However, according to Nikkei, while Foxconn is Apple’s largest iPhone manufacturing partner, it also produces AI servers for NVIDIA, which could limit its capacity to take on Apple’s AI server orders.

The Nikkei report highlights that Apple prefers to use its own chips for building servers that will power generative AI features in MacBooks and other devices. Citing industry sources, the report stated that Apple is exploring the production of its own AI servers and has been in talks with Foxconn. However, the volume of servers Apple is considering producing is relatively low compared to the demand for NVIDIA’s GB200 servers.

The report suggests that Apple wants Foxconn to produce AI servers in Taiwan to take advantage of Taiwan’s engineering talent and R&D resources. Apple, with less experience in designing data center servers compared to NVIDIA, may require additional support for the production of its AI servers.

The report notes that as mastering AI computing and expanding data center infrastructure become critical to next-generation computing, Apple is enhancing its server capabilities in response to heavy investments in AI data centers by rivals such as Microsoft, Amazon, and Google.

According to the Nikkei report citing sources, with Foxconn occupied with fulfilling orders for NVIDIA servers, Apple has turned to China’s Lenovo and its subsidiary LCFC for additional support, along with smaller suppliers like Universal Scientific Industrial to assist with production. Additionally, Apple’s discussions with Lenovo also include plans to build server production capability in Southeast Asia, outside of China.

The report highlights that building AI servers is more complex than anticipated, and currently only a few manufacturers worldwide are capable of producing NVIDIA’s AI servers, including Foxconn, Quanta, Wistron, and Supermicro. However, the production capacities of these manufacturers are largely contracted by NVIDIA.

On the other hand, according to TechNews, institutional investors pointed out that Foxconn has production capacity in multiple regions worldwide, and given the ongoing tensions between the U.S. and China, Apple’s AI servers may not necessarily need to be manufactured in Taiwan.

The report from TechNews further noted, citing institutional investors, that the current discussion between Apple and Foxconn may still be in the early stages. However, due to their long-standing partnership, even if Apple’s order volume is relatively small, Foxconn is likely to accept the production of Apple’s AI servers.

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(Photo credit: Foxconn)

SpaceX is reportedly urging Taiwanese suppliers to relocate production lines overseas due to geopolitical concerns. Citing Taiwan’s Ministry of Economic Affairs, CNA reported that 46 Taiwanese companies have already joined the global space supply chain this year. Taiwan has demonstrated competitive, self-sustained capabilities in satellite ground reception equipment development and manufacturing, and short-term political factors are unlikely to disrupt collaborations between international satellite companies and Taiwanese suppliers.

According to Reuters, citing industry sources and company documents, Elon Musk’s SpaceX has requested Taiwanese suppliers to shift production overseas, leading some companies to relocate parts of their supply chains, with at least one supplier moving production to Vietnam.

In response, Taiwan’s Ministry of Economic Affairs stated that, beyond SpaceX’s satellite communication services, other global satellite operators remain active. The international satellite communications trend now leans toward multi-orbit integration, combining GEO, MEO and LEO satellites to enhance communication resilience.

On components, the ministry highlighted that 46 Taiwanese companies have entered the global space supply chain this year. Additionally, through thematic R&D initiatives, the ministry supported 30 companies across 17 projects in developing integrated satellite ground reception equipment for diverse applications, including household, automotive, marine, and aviation use.

Overall, Taiwan’s Ministry of Economic Affairs is confident that Taiwan has developed independent R&D and manufacturing capabilities in satellite ground reception equipment. Taiwan’s manufacturing capacity is competitive, and short-term political factors are unlikely to affect supply chain partnerships between international satellite companies and Taiwanese suppliers.

(Photo credit: SpaceX)

According to a report from Economic Daily News, Southeast Asia has emerged as an investment hub for major cloud service providers (CSPs) worldwide. In response, Taiwanese server ODMs such as Foxconn, Quanta, Wiwynn, and Inventec are actively expanding their production capability in the region to meet the growing demand for AI servers from international CSPs and secure more orders by producing locally.

The report indicated that, for example, leading server ODM Foxconn has facilities in Taiwan, Vietnam, Thailand, Indonesia, and Malaysia. Taiwan and Vietnam serve as the two primary production bases for servers. Thailand mainly focuses on electric vehicle assembly, while Indonesia primarily manufactures electric vehicle components, and Malaysia mainly produces semiconductor-related products.

On the other hand, Ingrasys’s Taoyuan NanChing factory, a subsidiary of Foxconn, primarily produces AI servers, high-speed computing accelerators, and cloud storage products, according to the report citing industry sources. The Taoyuan NanChing factory has been recognized as the world’s first AI server lighthouse factory for leveraging AI to significantly enhance production efficiency, and NVIDIA GPU modules are produced automatically in the NanChing factory, as noted in the report.

As for Foxconn’s Vietnam factory, with the expansion of Foxconn Industrial Internet (Fii) in the local area, it has also become one of the major centers for server production, according to the report.

Another Taiwanese server ODM that has expanded its production in Southeast Asia is Quanta. The report noted that Quanta’s server factories are primarily located in Taiwan and Thailand. In August of this year, the company announced plans to invest 850 million baht (approximately USD 25 million) to expand its factory in Thailand, aiming to enhance server-related production capability in response to strong customer demand.

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(Photo credit: Foxconn)

The latest quarterly reports from the big four cloud service providers (CSPs) have been released in succession. According to a report from Commercial Times, not only has there been significant revenue growth, but capital expenditures for these CSPs have also surged compared to the same period last year, underscoring the ongoing momentum in AI investments.

Industry scources cited by Commercial Times estimate that capital expenditures by CSPs will surpass USD 240 billion by 2025, reflecting an annual increase of over 10%.

The report indicated that the increase in capital expenditures by CSPs is expected to boost demand for Taiwanese companies in the supply chain during the fourth quarter of this year and into next year, benefiting companies such as Quanta, Wistron, Wiwynn, and Inventec.

According to the report, Microsoft’s capital expenditures for the first quarter of fiscal year 2025 (the third quarter of 2024) reached USD 20 billion, higher than USD 19 billion of the previous quarter, reflecting a 78% increase year-on-year. Microsoft noted that the demand for AI now exceeds available production capacity, and they plan to continue increasing investment, expanding data center construction, and promoting AI services.

The report indicated that the market estimates Microsoft’s total expenditures for fiscal year 2025 will reach USD 80 billion, an increase of over USD 30 billion compared to the previous year.

Google’s capital expenditures in the third quarter reached USD 13.1 billion, an annual increase of 62%, which means that total capital expenditures in 2024 will reach USD 51.4 billion, an annual increase of 59%, and capital expenditures will continue to increase next year, according to the report.

Amazon’s capital expenditures for the third quarter reached USD 22.62 billion, reflecting an 81% year-on-year increase. This year, Amazon’s total capital expenditures have reached USD 51.9 billion, and full-year investments are projected to be as high as USD 75 billion. Furthermore, capital expenditures for next year are expected to be even higher, as the report indicated.

According to the report, as for Meta, capital expenditures in the third quarter were USD 9.2 billion, an annual increase of 36%. Moreover, Meta adjusted their capital expenditure forecast for fiscal 2024 to an upward revision of USD 40 billion. The report indicated that its capital expenditures will continue to grow in 2025.

The report highlighted that AI business opportunities will continue to benefit Taiwan’s major server ODMs. Companies such as Quanta, Wistron, Wiwynn, Inventec, and Foxconn all reported strong results in the third quarter and are optimistic about the fourth quarter and the year ahead.

According to the report, Quanta’s third-quarter revenue reached a record high, driven by strong demand for AI server orders. Quanta Chairman Barry Lam also expressed an optimistic outlook on the future of AI, noting that as large-scale CSPs develop generative AI applications, the scale of AI data centers is continually expanding, leading to a substantial increase in orders.

After demonstrating strong growth momentum in the first half of the year, Wistron has benefited from urgent orders in the second half. Additionally, some B200 series products utilizing the next-generation Blackwell platform are scheduled to be shipped after the fourth quarter. The report indicated that Wistron is quite optimistic about its performance for this quarter and next year.

Inventec plans to ship servers to customers primarily from US-based CSPs in the second half of the year. The report highlighted that orders from Google have increased as the company expands its purchase of AI servers based on its own TPU architecture, in addition to acquiring general-purpose servers for new platforms.

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(Photo credit: Microsoft)