Supermicro, a major server manufacturer, is facing potential delisting after failing to submit its financial report on time. Previously, the Economic Daily News reported that the company had halted expansion of its Malaysia plant. However, in response to inquiries from the Central News Agency, Supermicro clarified that its plans for the Malaysia facility remain unchanged, with production set to commence by the end of this year, and emphasized that customer orders are “still robust.”

According to the Economic Daily News, Supermicro’s Malaysia plant was originally scheduled to come online in the fourth quarter, doubling the company’s production capacity. However, amid financial turmoil, the project has been temporarily delayed. In response, YTL Group, a key client in Malaysia with close ties to Nvidia, has shifted its AI server orders to Wiwynn’s Malaysia facility, a subsidiary of Wistron, for local support.

When asked about the potential order transfer due to the Supermicro incident, Wistron declined to comment on individual clients and products.

In a written statement to the Central News Agency, Supermicro reiterated, “As previously announced, our Malaysia facility is on track to commence production and shipping by the end of 2024. This plan remains unchanged.”

Supermicro further noted, “We continue to secure substantial business in Malaysia within a highly competitive market, meeting all approved orders on schedule, and customer demand remains strong.”

Founded in 1993 by Taiwanese CEO Charles Liang, Supermicro has benefited from the AI boom, posting exponential growth in revenue each of the past three quarters. However, it missed its financial reporting deadline amid media reports in late September alleging accounting issues, now under investigation by the U.S. Department of Justice.

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• [News] Supermicro’s Financial Crisis Shifts Malaysia’s YTL Group Order to Taiwanese Firm

(Photo credit: Supermicro)

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)

At its earnings call on August 14th, Taiwanese tech giant Foxconn addressed the progress of the highly anticipated launch of NVIDIA’s next-generation AI server, the GB200.

According to a report by Commercial Times, Foxconn confirmed that the development of the server cabinets is on schedule, and the company will be among the first suppliers to deliver, with shipments expected to begin in the fourth quarter. The company also expects significant growth throughout the year, driven by strong demand for AI servers.

Addressing concerns about the progress of its AI server business, Foxconn spokesperson James Wu stated that driven by strong customer demand, the company’s AI server revenue grew by more than 60% quarter-over-quarter in Q2, accounting for over 40% of its total server revenue.

Wu reaffirmed that the robust demand for AI servers is expected to continue, and the company maintains its forecast that AI servers will contribute 40% of its total server revenue for the year.

Additionally, Foxconn has observed strong demand from various types of customers for the new generation of AI cabinet solutions, which is expected to significantly contribute to its server revenue in 2025.

Previously, per a report from The Information, NVIDIA’s GB200 is said to be experiencing yield issues, leading to a one-quarter delay in mass shipments. When asked about potential delays in the shipment of GB200 AI servers, Wu responded that the development timeline for the GB200 cabinets is on schedule.

In the second quarter, Foxconn reported revenue of NTD 1.55 trillion (roughly USD 48 billion), with a gross margin of 6.37% and earnings per share (EPS) of NTD 2.53.

For the first half of the year, its revenue reached NTD 2.87 trillion (roughly USD 88.9 billion), marking a 4% year-over-year increase. Gross margin, operating margin, and net profit margin were 6.37%, 2.83%, and 1.98%, respectively, all showing improvements compared to the same period last year, which stood at 6.21%, 2.58%, and 1.66%.

Cumulative EPS for the first half was NTD 4.12. Looking ahead to the third quarter, Foxconn expects operations to gain momentum as they enter the traditional peak season, with both quarter-over-quarter and year-over-year growth anticipated.

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• [News] Foxconn Remains Unfazed Despite NVIDIA’s GB200 Delay, with Customers Aim to Secure Their Orders
• [News] GB200 AI Servers Generate USD 210 Billion Annual Revenue, Boosting Supply Chain Growth

(Photo credit: Foxconn)

Charles Liang, President and CEO of AI server giant Supermicro, delivered a keynote speech at COMPUTEX earlier today. According to a report from CNA, while expressing his optimism in expanding the company’s market share in the Direct Liquid Cooling (DLC) field, Liang targets to capture a 15% market share in the new data center market by next year.

According to the report, Liang mentioned that Supermicro’s DLC solutions had a market share of less than 1% over the past 30 years. However, as DLC solutions now have a cost comparable to air-cooled solutions, yet more energy-efficient, more manufacturers are beginning to adopt them. It is estimated that Supermicro has around 1000 liquid-cooled cabinets shipped each month, and the aim is to capture 15% of the new data center market share within next year.

Supermicro offers comprehensive solutions at both the cabinet and data center levels. Its operations have expanded globally from the headquarter in San Jose, California, to manufacturing and operation centers in Asia and Europe. Liang stated that Supermicro’s Malaysian plant is expected to be operational in the fourth quarter of this year, with a monthly production capacity of up to 5000 cabinets, according to CNA’s report today.

Regarding Supermicro’s expansion plans, Liang said earlier that Supermicro, with over 4000 employees worldwide, its top priority would be expanding in Taiwan, aiming to finalize plans for a new campus in the near future.

In addition, Liang pointed out that AI is rapidly and significantly changing the world. Through its collaboration with GPU giant NVIDIA, Supermicro has become one of the leading suppliers of AI systems. He also emphasized that by adopting more energy-efficient systems, green computing can be cost-free and offer significant bonuses, according to the report.

While reiterating Supermicro’s strong bond with NVIDIA, Liang invited NVIDIA CEO Jensen Huang to join him on stage. When Liang introduced the liquid-cooled server cabinets on stage, Huang praised the liquid cooling solution for significantly reducing data center costs.

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• [COMPUTEX 2024] The Rise of Generative AI Sparks Innovation across Industries, with Taiwan-based Companies Leading as Essential Partners in the Global Supply Chain

(Photo credit: Supermicro)

“The Dawn of Generative AI Has Come!” This new chapter in the course of human technological evolution was first introduced by NVIDIA’s founder, Jensen Huang. Qualcomm’s CEO, Cristiano Amon, also shares this optimism regarding generative AI. Amon believes this technology is rapidly evolving and being adopted for applications such as mobile devices. It is expected to have the potential to radically transform the landscape of the smartphone industry. Similarly, Intel has declared the arrival of the “AI PC” era, signaling a major shift in computing-related technologies and applications.

This year, AI is transitioning from cloud computing to on-premise computing. Various “AI PCs” and “AI smartphones” are being introduced to the market, offering a wide range of selections. The current year of 2024 is even being referred to as the “Year of AI PC,” with brands such as Asus, Acer, Dell, Lenovo, and LG actively releasing new products to capture market share. With the rapid rise of AI PCs and AI smartphones, revolutionary changes are expected to occur in workplaces and people’s daily lives. Furthermore, the PC and smartphone industries are also expected to be reinvigorated with new sources of demand.

An AI PC refers to a laptop (notebook) computer capable of performing on-device AI computations. Its main difference from regular office or business laptops lies in its CPU, which includes an additional neural processing unit (NPU). Examples of AI CPUs include Intel’s Core Ultra series and AMD’s Ryzen 8040 series. Additionally, AI PCs come with more DRAM to meet the demands of AI computations, thereby supporting related applications like those involving machine learning.

Microsoft’s role is crucial in this context, as the company has introduced a conversational AI assistant called “Copilot” that aims to seamlessly integrate itself into various tasks, such as working on Microsoft Office documents, video calls, web browsing, and other forms of collaborative activities. With Copilot, it is now possible to add a direct shortcut button for AI on the keyboard, allowing PC users to experience a holistic collaborative relationship with AI.

In the future, various computer functions will continue to be optimized with AI. Moreover, barriers that existed for services such as ChatGPT, which still require an internet connection, are expected to disappear. Hence, AI-based apps on PCs could one day be run offline. Such a capability is also one of the most eagerly awaited features among PC users this year.

Surging Development of LLMs Worldwide Has Led to a Massive Increase in AI Server Shipments

AI-enabled applications are not limited to PCs and smartphones. For example, an increasing number of cloud companies have started providing services that leverage AI in various domains, including passenger cars, household appliances, home security devices, wearable devices, headphones, cameras, speakers, TVs, etc. These services often involve processing voice commands and answering questions using technologies like ChatGPT. Going forward, AI-enabled applications will become ubiquitous in people’s daily lives.

Not to be overlooked is the fact that, as countries and multinational enterprises continue to develop their large language models (LLMs), the demand for AI servers will increase and thus promote overall market growth. Furthermore, edge AI servers are expected to become a major growth contributor in the future as well. Small-sized businesses are more likely to use LLMs that are more modest in scale for various applications. Therefore, they are more likely to consider adopting lower-priced AI chips that also offer excellent cost-to-performance ratios.

TrendForce projects that shipments of AI servers, including models equipped with GPUs, FPGAs, and ASICs, will reach 1.655 million units in 2024, marking a growth of 40.2% compared with the 2023 figure. Furthermore, the share of AI servers in the overall server shipments for 2024 is projected to surpass 12%.

Regarding the development of AI chips in the current year of 2024, the focus is on the competition among the B100, MI300, and Gaudi series respectively released by NVIDIA, AMD, and Intel. Apart from these chips, another significant highlight of this year is the emergence of in-house designed chips or ASICs from cloud service providers.

In addition to AI chips, the development of AI on PCs and smartphones is certainly another major driving force behind the technology sector in 2024. In the market for CPUs used in AI PCs, Intel’s Core Ultra series and AMD’s Ryzen 8000G series are expected to make a notable impact. The Snapdragon X Elite from Qualcomm has also garnered significant attention as it could potentially alter the competitive landscape in the near future.

Turning to the market for SoCs used in AI smartphones, the fierce competition between Qualcomm’s Snapdragon 8 Gen 3 and MediaTek’s Dimensity 9300 series is a key indicator. Another development that warrants attention is the adoption of AI chips in automotive hardware, such as infotainment systems and advanced driver assistance systems. The automotive market is undoubtedly one of the main battlegrounds among chip suppliers this year.

The supply chain in Taiwan has played a crucial role in providing the hardware that supports the advancement of AI-related technologies. When looking at various sections of the AI ecosystem, including chip manufacturing as well as the supply chains for AI servers and AI PCs, Taiwan-based companies have been important contributors.

Taiwan-based Companies in the Supply Chain Stand Ready for the Coming Wave of AI-related Demand

In the upstream of the supply chain, semiconductor foundries and OSAT providers such as TSMC, UMC, and ASE have always been key suppliers. As for ODMs or OEMs, companies including Wistron, Wiwynn, Inventec, Quanta, Gigabyte, Supermicro, and Foxconn Industrial Internet have become major participants in the supply chains for AI servers and AI PCs.

In terms of components, AI servers are notable for having a power supply requirement that is 2-3 times greater than that of general-purpose servers. The power supply units used in AI servers are also required to offer specification and performance upgrades. Turning to AI PCs, they also have higher demands for both computing power and energy consumption. Therefore, advances in the technologies related to power supply units represent a significant indicator this year with respect to the overall development of AI servers and AI PCs. Companies including Delta Electronics, LITE-ON, AcBel Polytech, CWT, and Chicony are expected to make important contributions to the upgrading and provisioning of power supply units.

Also, as computing power increases, heat dissipation has become a pressing concern for hardware manufacturers looking to further enhance their products. The advancements in heat dissipation made by solution providers such as Sunon, Auras, AVC, and FCN during this year will be particularly noteworthy.

Besides the aforementioned companies, Taiwan is also home to numerous suppliers for other key components related to AI PCs. The table below lists notable component providers operating on the island.

With the advent of generative AI, the technology sector is poised for a boom across its various domains. From AI PCs to AI smartphones and a wide range of smart devices, this year’s market for electronics-related technologies is characterized by diversity and innovation. Taiwan’s supply chain plays a vital role in the development of AI PCs and AI servers, including chips, components, and entire computing systems. As competition intensifies in the realm of LLMs and AI chips, this entire market is expected to encounter more challenges and opportunities.

Join the AI grand event at Computex 2024, alongside CEOs from AMD, Intel, Qualcomm, and ARM. Discover more about this expo! https://bit.ly/44Gm0pK

(Photo credit: Qualcomm)