As per a report from Business Insider, Taiwanese AI server giant Wiwynn has filed a lawsuit against Elon Musk’s social platform X (formerly Twitter), claiming it refused to pay USD 120 million for parts. However, this may not be the first time a major Taiwanese server manufacturer has encountered payment disputes with X.

According to a report from Economic Daily News, in the fourth quarter of 2022, MiTAC also faced issues when Musk took over Twitter, potentially leading to unpaid server bills.

After Musk took over Twitter, he aggressively implemented cost-cutting strategies, including layoffs and renegotiating orders with suppliers. MiTAC, as one of Twitter’s server suppliers, might also be impacted, recording a NTD 1.4 billion (around USD 44 million) write-down in inventory and bad debt provisions for accounts receivable in the fourth quarter of 2022.

This directly resulted in a NTD 346 million (roughly USD 10.8 million) loss for that quarter, marking only the second time MiTAC has reported a quarterly loss since its public listing.

Still, due to confidentiality, MiTAC has not disclosed the names of clients with delayed payments.

After navigating the downturn in Q4 2022, MiTAC saw a significant rebound in Q2 2023. During the traditionally slow season for servers, the company achieved notable growth in net profit, with a quarterly increase of 367.11% and a year-over-year increase of 34.72%, reaching an EPS of NT$0.59.

It is reported by Economic Daily News that the surge in profits was largely due to partial payments received from X. Additionally, MiTAC managed to either resell the components it previously reserved for X or retrieve them, which contributed to its soaring quarterly profits.

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(Photo credit: MiTAC)

According to a report by Taiwan’s Economic Daily, a trend is taking shape as computer brand manufacturers venture into the AI server market. Notably swift on this path are Taiwan’s ASUS, Gigabyte, MSI, and MITAC. All four companies hold a positive outlook on the potential of AI server-related business, with expectations of reaping benefits starting in the latter half of this year and further enhancing their business contributions next year.

Presently, significant bulk orders for AI servers are stemming from large-scale cloud service providers (CSPs), which has also presented substantial opportunities for major electronic manufacturing services (EMS) players like Wistron and Quanta that have an early foothold in server manufacturing. As the popularity of generative AI surges, other internet-based enterprises, medical institutions, academic bodies, and more are intensifying their procurement of AI servers, opening doors for brand server manufacturers to tap into this burgeoning market.

ASUS asserts that with the sustained growth of data center/CSP server operations in recent years, the company’s internal production capacity is primed for action, with AI server business projected to at least double in growth by next year. Having established a small assembly plant in California, USA, and repurposing their Czech Republic facility from a repair center to a PC manufacturing or server assembly line, ASUS is actively expanding its production capabilities.

In Taiwan, investments are also being made to bolster server manufacturing capabilities. ASUS ‘s Shulin factory has set up a dedicated server assembly line, while the Luzhu plant in Taoyuan is slated for reconstruction to produce low-volume, high-complexity servers and IoT devices, expected to come online in 2024.

Gigabyte covers the spectrum of server products from L6 to L10, with a focus this year on driving growth in HPC and AI servers. Gigabyte previously stated that servers contribute to around 25% of the company’s revenue, with AI servers already in delivery and an estimated penetration rate of approximately 30% for AI servers equipped with GPUs.

MSI’s server revenue stands at around NT$5 billion, constituting roughly 2.7% of the company’s total revenue. While MSI primarily targets small and medium-sized customers with security and networking servers, the company has ventured into the AI server market with servers equipped with GPUs such as the NVIDIA RTX 4080/4090. In response to the surging demand for NVIDIA A100 and H100 AI chips, MSI plans to invest resources, with server revenue expected to grow by 20% to NT$6 billion in 2024, with AI servers contributing 10% to server revenue.

MITAC ‘s server business encompasses both OEM and branding. With MITAC’s takeover of Intel’s Data Center Solutions Group (DSG) business in July, the company inherited numerous small and medium-sized clients that were previously under Intel’s management.

(Photo credit: ASUS)