December 18, 2019

Semiconductor Trends - Server Supply Chain

2317 TT, 2356 TT, 2382 TT, 3231 TT, 3706 TT
By Van Tran
Demand from hyperscale customers could push up 4Q19 server shipments slightly qq for Taiwan’s top five ODMs, according to Asian supply chain sources.
  • 4Q19 shipments from Taiwan’s top 5 server ODMs expected up approximately 4% qq (vs. expectations of flat-up 3% qq in August), driven by increased orders from hyperscale customers such as MSFT, FB (as in 3Q19)
  • 1Q20 shipments expected down 3%-4% qq, but outlook could turn more positive with U.S.-China trade deal

Asian supply chain sources expect 4Q19 server shipments of the top five Taiwanese server ODMs -- Wistron Corp. (3231 TT), Inventec Corp. (2356 TT), Quanta Computer Inc. (2382 TT), Hon Hai Precision Industry Co. Ltd. (2317 TT) and Mitac Holdings Corp. (3706 TT) -- to reach 2.6-2.8 million units during 4Q19, up approximately 4% qq, higher than sources' expectations in August of flat-up 3% qq. (Taiwanese ODMs supply close to 80% of total global servers.)

Sources said shipment growth was lifted by orders from hyperscale customers. “Wistron had a lot of rush orders from Microsoft [Corp.] this quarter for Azure cloud computing and other gaming cloud services,” one said. Another said Wistron also benefited from increased orders from Facebook Inc. Meanwhile, sources said demand from enterprise server brands such as Dell Technologies Inc. and Hewlett-Packard Enterprise Co. was flat qq.

Sources expect 1Q20 shipments to decline 3%-4% qq, but a few said shipments could improve if the U.S.-China trade war ends with an agreement in the next few weeks.