Quanta expects server business to grow

FEELING FROGGY: AI servers have driven sales for the computer company sky-high this year, the CFO said in an earnings conference, a trend he expects to continue

• By Meryl Kao / Staff Reporter

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Quanta Computer Inc (廣達) expects its server business to grow by a double-digit percentage next year, after shipments of artificial intelligence (AI) servers and general-purpose servers increased substantially this year, Quanta chief financial officer Elton Yang (楊俊烈) told an online earnings conference yesterday.

Servers accounted for more than 80 percent of Quanta’s record third-quarter revenue of NT$1.12 trillion (US$34.1 billion). The company expects the proportion to stay at the same level for the full year before rising to 85 to 90 percent next year, it said.

AI servers accounted for 75 to 80 percent of total server revenue last quarter and are expected to rise to 80 to 85 percent next year, it said.

A Quanta Computer Inc sign is pictured outside the company’s headquarters in New Taipei City in an undated photograph.

Photo courtesy of Quanta Computer Inc

Quanta has achieved its target of triple-digit growth in AI server revenue this year, Yang said. Next year, growth is expected to moderate to a double-digit percentage due to a higher comparison base, he said.

“Next year still looks good for us,” Quanta vice chairman and president C.C. Leung (梁次震) said.

Quanta’s AI server shipments edged down quarter-on-quarter last quarter, reflecting the transition between Nvidia Corp’s GB300 and Vera Rubin platforms, but revenue still increased sequentially as higher average selling prices offset the decline in volume, he said.

The product transition is expected to continue this quarter, but AI server revenue is still expected to grow sequentially, he said.

Small-volume shipments of Vera Rubin-based AI racks are expected to begin this quarter, with more meaningful volumes slated for the first quarter of next year, Yang said.

The company expects shipments of general-purpose servers to continue growing this quarter on continued development of agentic AI, but notebook computer shipments are projected to fall by a double-digit percentage quarter-on-quarter this quarter and decline 15 percent to 20 percent for the full year, he said.

Quanta allocated NT$34.6 billion for capital expenditure in the first nine months of this year, with AI capacity expansion in the US and Thailand accounting for about 80 percent of the outlay, it said.

The company is on track to double its AI-related capacity from last year, with capital expenditure set to reach NT$40 billion to NT$45 billion next year, focusing on power and cooling infrastructure at its factories worldwide, it said.

The company reported that net profit last quarter fell 0.8 percent year-on-year, but rose 73 percent quarter-on-quarter to NT$28.42 billion. Earnings per share rose to NT$7.08 from NT$4.26 a year earlier, but slipped from NT$7.43 in the previous quarter.

Gross margin fell to 4.75 percent from 6.84 percent a year earlier and from 5.02 percent in the previous quarter. The decline was due to a higher share of high-priced AI server system shipments, as their substantial material costs diluted margins, Yang said.

Quanta is negotiating with customers to adopt more consignment models for next-generation racks to improve profitability and ease working capital pressure, he added.