Key Nvidia Corp. partner Quanta Cloud Technology expects to double sales of its artificial intelligence servers in 2024 and demand to persist over the longer term as businesses weave AI into their operations and services.
The AI boom “actually is going to maintain and you’ll see its growth keeping stronger and stronger for the upcoming years,” President Mike Yang of supplier QCT, a wholly-owned subsidiary of Taiwan’s Quanta Computer Inc., told Bloomberg Television in an interview.
Quanta Computer, which works with Nvidia to build AI servers, has benefited greatly from Wall Street’s bet on the technology as the next big thing. Like its Santa Clara, California-based chipmaking partner, whose AI accelerators are the must-have hardware this year, Quanta’s share price has more than doubled in 2023.
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Various component providers are working together to increase production capacity and help alleviate an ongoing shortage of Nvidia’s cutting-edge AI chips, Yang said, without committing to fulfilling all demand from customers by next year. Nvidia executives told analysts this month they were confident of expanding supply to meet heightened demand.
“We have a very much limited supply, but next year I think Nvidia will solve everything,” Yang said.
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QCT generates billions of dollars in revenue annually, with AI servers accounting for 65% of its total sales, Yang said. He differentiates AI servers as those that include graphics processors, such as models made by Nvidia, versus traditional processor-driven hardware where Intel Corp. still has a dominant share.
Alphabet Inc.’s Google Cloud, Amazon.com Inc.’s AWS and Alibaba Group Holding Ltd. are among QCT’s biggest customers. The company competes with the likes of Shanghai-listed Foxconn Industrial Internet Co. and Taiwanese peer Wiwynn Corp. to provide servers for cloud service providers, mainly in the US and China.
Global shipments of AI servers are expected to grow at a compound annual rate of 29% between 2022 and 2026, according to Taipei-based research firm TrendForce. Analyst and researcher estimates have proven overly conservative this year, as Nvidia has in successive quarters shocked the market with blowout sales forecasts.
Yang enjoyed a moment in the spotlight in late May when Nvidia Chief Executive Officer Jensen Huang visited QCT’s booth at a tech expo in Taipei. Huang offered his signature leather jacket for Yang to wear during their joint marketing event. Yang said that the two companies first started working together to develop server products in 2015.
Like many other manufacturers, Yang is keeping a wary eye on the US-China trade conflict. The executive said QCT is looking to grow its production lines in the US, Germany and Thailand, while maintaining existing capacity in China, though he also said firms cannot afford to dismiss China as a major market.
“I still believe China is the biggest market,” Yang said. “I do believe people will still focus on both. China and the rest of the world.”