On August 27, AI server giant Supermicro was accused of accounting violations, inadequate disclosure of related party transactions, and evading sanctions by selling products to Russia by short-seller Hindenburg Research.

In addition, Supermicro announced on August 28 that it would delay the release of its annual report, potentially facing order withdrawals. Industry sources also believe this news presents a chance for Supermicro’s competitor Dell to gain market share.

Besides Dell, a report from Commercial Times also points out that Hewlett Packard Enterprise (HPE) could benefit from the shift in orders, potentially boosting shipments for its Taiwanese supply chain partners such as Wistron, Inventec, Quanta, and Foxconn.

The report from Commercial Times also cite sources, suggesting that this shift could provide Gigabyte, which is actively promoting its liquid-cooled products for NVIDIA’s H200 series, with  opportunities in the second half of the year.

Wistron, as a key supplier of motherboard and GPU accelerator cards for NVIDIA’s Hopper and Blackwell GPU, is not only a major supplier for Supermicro’s server motherboards but also for Dell. Its clients include HPE and Lenovo as well, which makes the company one of the primary beneficiaries.

Similarly, Inventec, one of the server motherboard suppliers, is also expected to benefit if the shift in orders boosts Dell, HPE, and Lenovo.

Moreover, one of Supermicro’s largest clients, CoreWeave, is transitioning to become a cloud computing service provider specializing in GPU-accelerated computing.

This shift has increased demand for GPU-accelerated computing and liquid cooling solutions. Reportedly, it’s believed that Gigabyte, which holds orders from CoreWeave, could be one of the biggest beneficiaries of the upcoming order shift.

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• [News] Supermicro Faces Order Withdrawal Crisis, Potentially Benefiting Dell
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(Photo credit: Supermicro)

Supermicro Computer has reportedly been targeted by short-sellers and questioned over alleged accounting manipulations, leading to a delay in filing its 2024 10-K annual report and causing market unease.

On August 27, Hindenburg Research, a short-selling company known for targeting major entities like India’s Adani, Nikola, Lordstown, and fintech giant Block, released a report accusing Supermicro of accounting violations, inadequate disclosure of related party transactions, and evading sanctions by selling products to Russia.

At the moment following the release of Hindenburg’s report, Supermicro also announced a delay in submitting its 2024 fiscal year 10-K annual report, citing the need for more time to assess the design of internal controls and operational effectiveness. This move has further heightened market concerns about Supermicro.

Moreover, Hindenburg also raised concerns about the quality of Supermicro’s products and services, suggesting that competitors like Dell might capitalize on Supermicro’s lost orders.

According to a report from Barron’s citing Evercore ISI analyst Amit Daryanani’s report, it’s highlighted that Supermicro is facing a risk of customer order withdrawals.

Supermicro, on the other hand, didn’t immediately respond to a request for comment about the delay in filing the annual report.

Read more

• [News] Quick Couplings’ Buying Surge Reportedly Leads to AI Server Component Shortage Brought up by Supermicro
• [News] Supermicro’s Financial Results Reveal Profit Shortfall

(Photo credit: Supermicro)

China has long been the preferred location for tech companies to establish their supply chains. However, in recent years, the decline in population dividends has led to rising labor costs, and the need for tech companies to mitigate the impact of geopolitical risks has prompted them to accelerate the relocation of supply chains out of China, with some shifting production capacity to Southeast Asia and South Asia.

Recently, as per a report from TechNews citing sources, it’s indicated that HP is considering moving more than half of its personal computer production away from China to countries like Thailand and Vietnam.

This move is primarily aimed at significantly reducing its reliance on China’s supply chain, as well as addressing global trade dynamics and the need to lower costs.

In addition to HP, several well-known tech companies are also shifting their supply chains to Southeast Asian and South Asian countries.

• Apple

One notable example of supply chain relocation is Apple. Having long relied on China’s supply chain, Apple is now finding that the era of full dependence on China is coming to an end due to political and commercial pressures.

iPhone

As one of Apple’s most important products, iPhone has been a key focus in this shift.

Although supply chain diversification was always part of Apple’s strategy, the plan has been accelerated following a series of disruptions at Foxconn’s Zhengzhou plant during the pandemic. These events have compelled Apple to expedite its efforts to diversify its supply chain.

According to a report from Business Standard, since April of this year, Apple has assembled iPhones worth USD 14 billion in India, with 14% of iPhones now being manufactured there.

Rajeev Chandrasekhar, India’s former Union Minister of State for Electronics and Information Technology, also stated on the X platform that by 2028, it is estimated that up to 25% of iPhones will be made in India.

iPad

In addition to iPhone, Apple has also started shifting part of its iPad production to Vietnam. Foxconn is responsible for manufacturing iPads in Vietnam, where mass production and shipments are already underway.

MacBook

Similarly, the MacBook production line has been partially moved out of China and relocated to Vietnam, which is primarily produced by Quanta and Foxconn in their Vietnamese facilities.

Earlier rumors cited by Nikkei have suggested that Apple was considering shifting some of its production to Thailand as well. However, Thailand’s supply chain for key components is not yet fully developed, with many parts still reliant on imports from China.

The associated transportation costs and the risk of potential damage during transit have led Apple to prioritize setting up production lines in Vietnam first.

Nevertheless, Thailand’s strong electronics manufacturing infrastructure and cost advantages make it a potential future production site for Apple.

Last year, Qualcomm entered the PC market, sparking an AI PC frenzy in collaboration with Microsoft Copilot+. According to Qualcomm CEO Cristiano Amon, beyond mobile devices, PCs, and automotive applications, Qualcomm is now focusing on data centers. In the long term, these products will eventually adopt Qualcomm’s in-house developed Nuvia architecture.

Amon pointed out that as PCs enter a new cycle and AI engines bring new experiences, just as mobile phones require slim designs but must not overheat or become too bulky, Qualcomm has always been focused on technological innovation rather than just improving power consumption. While traditional PC leaders may emphasize TOPS (trillions of operations per second), energy and efficiency are also crucial.

Amon stressed the importance of maintaining battery life and integrating functionalities beyond CPU and GPU, which he believes will be key to defining leadership in the PC market. He also joked that if you use an X86 computer, it would run out of battery quickly, but with a new computer (AI PC) next year, it would last a long time without draining power.

Amon noted that Qualcomm’s Snapdragon X Elite and Snapdragon X Plus have been developed with superior NPU performance and battery life. Moreover, Snapdragon X Elite is just the first generation, which focuses more on performance supremacy, while the upcoming generations may put more emphasis on computational power, and integrating these into chip design.

Currently, more than 20 AI PCs equipped with Snapdragon X Elite and Snapdragon X Plus have been launched, including models from 7 OEMs, such Acer, Asus, Dell, HP, and others.

Amon believed that the market penetration rate will continue to increase next year. He sees AI PCs as a new opportunity, suggesting that it may take some time for them to be widely adopted when a new version of Windows for PC market emerges. However, considering the end of Windows 10 support, users can transition to new models with Copilot+, which he believes will be adopted much faster.

Amon pointed out that NPUs have already demonstrated their advantages in the PC and automotive chip industries, and these capabilities can be extended to data centers or other technologies.

He then highlighted data centers as a significant opportunity for transition to Arm architecture and expressed belief in increased opportunities for edge computing in the future. Amon also mentioned the adoption of Nuvia architecture in smartphones, data centers, and automotive industries. Additionally, he disclosed plans to launch mobile products featuring Microsoft processors at the October Snapdragon Annual Summit.

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(Photo credit: Qualcomm)

The GPU shortage issue has reportedly been alleviated. Per a report from Economic Daily News, it has led to a significant improvement in delivery times for major server brands like Dell. Delivery times have decreased from 40 weeks at the end of last year to a normal cycle of 8-12 weeks now, and sometimes even shorter.

Dell is reportedly capitalizing on the opportunities in artificial intelligence (AI), according to the same report citing Terence Liao, General Manager of Dell Taiwan, who indicated on April 9th that the company is experiencing strong server orders and demand in the Taiwanese market. This surge is primarily due to the robust AI needs within Taiwan’s corporate sector.

As for the previously challenging GPU shortage issue affecting the industry, delivery times have significantly improved this year following the expansion of CoWoS (Chip-on-Wafer-on-Substrate) capacity.

Terence Liao mentioned that towards the end of last year, there was indeed a tight supply of NVIDIA’s H100 GPUs, leading to Dell’s delivery times averaging around 40 weeks and competitors experiencing even longer delays of up to 52 weeks. However, starting from February this year, GPU supply has notably improved. For Dell in Taiwan specifically, delivery times have returned to a normal cycle of 8-12 weeks, and sometimes even shorter.

With the GPU shortage issue eased, Dell Taiwan openly acknowledges that they currently have a high volume of server orders and strong demand, largely driven by Taiwan’s enterprises seeking AI solutions. Terence Liao analyzed that, from the perspective of the Taiwan market, industries actively adopting AI include manufacturing, healthcare, government, finance, and telecommunications sectors.

As per Dell’s GenAI Pulse Survey, 78% of IT decision-makers express anticipation for AI-driven solutions to unleash potential within enterprises, viewing AI as a means to enhance productivity, streamline processes, and reduce costs.

Moreover, from a corporate budget perspective, the allocation for AI servers has increased from around 10% in the past to approximately 20% currently. This shift indicates a heightened commitment within the Taiwanese industry towards investing in AI.

Terence Liao emphasized that the demand for AI servers primarily comes from Cloud Service Providers (CSPs) and general enterprises. While CSPs still represent a significant portion of this demand, Dell is particularly pleased to see an increase in demand from general enterprises.

Previously, TrendForce underscores that the primary momentum for server shipments this year remains with American CSPs. However, due to persistently high inflation and elevated corporate financing costs curtailing capital expenditures, overall demand has not yet returned to pre-pandemic growth levels. Global server shipments are estimated to reach approximately. 13.654 million units in 2024, an increase of about 2.05% YoY. Meanwhile, the market continues to focus on the deployment of AI servers, with their shipment share estimated at around 12.1%.

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• Global Server Shipments Expected to Increase by 2.05% in 2024, with AI Servers Accounting For Around 12.1%, Says TrendForce
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(Photo credit: Dell)