Delta says Q4 revenue to rise from last quarter

• By Meryl Kao / Staff reporter

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Delta Electronics Inc (台達電) on Thursday said that revenue this quarter would increase from the previous quarter’s NT$197.06 billion (US$6.07 billion), driven by rising demand for its power and thermal management products amid robust investment in artificial intelligence (AI) infrastructure.

Order momentum for this quarter remains high and is expected to extend into next year, supported by robust demand for AI data center-related products, Delta chairman Ping Cheng (鄭平) told an earnings conference.

Despite component shortages, power constraints, labor shortfalls and project delays, long-term AI data center demand and growth remain intact, Cheng said.

Delta Electronics Inc chairman Ping Cheng attends the company’s quarterly earnings conference in Taipei on Oct. 30 last year.

Photo: CNA

“I think no matter what [short-term] problems it faces, the trend remains unchanged,” Cheng said, adding that Delta remains optimistic about its long-term business outlook.

Data center and AI-related products accounted for about 50 percent of the company’s revenue of NT$539.7 billion in the first three quarters of this year, he said.

Capital expenditure among the world’s four major cloud service providers is expected to top US$1 trillion next year, driving global data center investment to US$1.5 trillion, Delta vice president Lanford Liu (劉亮甫) said.

Power electronics products accounted for 54 percent of Delta’s revenue last quarter, followed by infrastructure products at 33 percent, automation devices at 8 percent and mobility applications at 5 percent, the company said.

Delta reported net profit of NT$23.5 billion last quarter, down 6.5 percent quarter-on-quarter, but up 26.3 percent year-on-year.

The earnings results were the strongest for the third quarter in the company’s history.

Third-quarter earnings per share dropped to NT$9.04 from NT$9.68 the previous quarter, but were up from NT$7.16 a year earlier.

Gross margin fell to 34.08 percent last quarter from 35.64 percent the previous quarter and 34.87 percent a year earlier as component shortages and delays in customers’ data center construction plans pushed up inventory costs, Delta said.

Gross margin is expected to be no lower than last quarter, Cheng said.

Material costs have risen about 2 percent since the beginning of this year, Cheng said.

Delta is considering price hikes this quarter or next quarter due to higher material costs, he said.

Delta booked inventory write-down provisions equivalent to about 1.7 percent of revenue last quarter, mainly due to customer order adjustments, chief financial officer Yu Po-wen (余博文) said.

In its thermal solutions business, liquid-cooling products accounted for 13 percent of Delta’s revenue, or about NT$25 billion, last quarter and are expected to remain at a similar percentage for the rest of this year, Yu said.

Separately, Delta’s Singapore subsidiary on Wednesday approved a planned US$120 million capital injection into its wholly owned Malaysian subsidiary.

Delta plans to build a large production base in Malaysia and aims over about five years to expand its capacity to a scale comparable with its Thailand operations, Cheng said.