Quanta’s 3rd-quarter profit overestimates, AI servers to grow at 3-digit rate Industry & Economics | Central News Agency CNA
Quanta Computer reported strong financial growth in the third quarter of 2023. The company’s revenue reached NT$424.549 billion, marking a 37% increase from the previous quarter and a 48.2% increase from the same quarter last year. Net profit attributable to shareholders was NT$16.633 billion, a 9.9% annual rise.
The company’s board approved a US$230 million investment in its subsidiary QMN in Tennessee to expand AI server manufacturing. AI servers are driving sales, expected to grow by triple digits next year. In the second quarter, AI servers accounted for over 50% of total server revenue, and that figure is anticipated to rise above 70% next year.
Notebook computer shipments are projected to decline by 10% to 15% in the fourth quarter, with modest growth expected through 2024. In the automotive sector, revenue is expected to grow at a moderate pace next year, remaining in single digits.
How is Quanta Computer adapting to shifts in demand from notebooks to AI technologies?
Interview with Dr. Elaine Chen, Technology Market Analyst
News Directory 3 (ND3): Thank you for joining us today, Dr. Chen. Quanta Computer recently reported impressive financial growth in Q3 2023. What do you think are the key factors driving this significant increase in revenue and profit?
Dr. Elaine Chen (EC): Thank you for having me. Quanta’s substantial growth can be largely attributed to the rise in demand for AI servers. As we’ve seen, AI technology is rapidly transforming the IT landscape. The company’s ability to capture over 50% of total server revenue from AI servers in Q2 2023, with projections to exceed 70% next year, highlights their strategic position in the market. Additionally, their substantial investment in expanding manufacturing capabilities reflects a proactive approach to meeting this surge in demand.
ND3: The board’s approval of a US$230 million investment in QMN in Tennessee indicates a strong commitment to AI technologies. How essential is this investment for Quanta’s future growth?
EC: This investment is crucial, not just for Quanta’s growth, but also for the U.S. tech ecosystem. By enhancing their AI server manufacturing capabilities, Quanta is setting itself up to capitalize on the increasing reliance on cloud computing and AI technology. The triple-digit growth anticipated in AI server sales next year could position Quanta as a leader in this domain, especially as global businesses ramp up their digital transformation efforts.
ND3: However, the company is forecasting a 10% to 15% decline in notebook shipments for Q4. What does this suggest about market trends?
EC: The expected decline in notebook shipments indicates a shift in consumer and enterprise focus. While there might have been robust sales in prior quarters, the market is experiencing a recalibration as more resources and attention are channeled toward AI and cloud computing. Even though Quanta faces challenges in the notebook sector, their strategic shift towards AI servers positions them well for the future. Modest growth in that space through 2024 also suggests a more sustainable outlook as they diversify their product offerings.
ND3: With Quanta expanding its factories in Thailand, the U.S., and Europe, how significant are these expansions in terms of global market competition?
EC: These expansions are highly significant. By increasing manufacturing capacity across different geographical locations, Quanta is not only mitigating risks associated with supply chain disruptions but also positioning itself as a more competitive player globally. It allows them to respond swiftly to demand fluctuations, particularly in lucrative markets like the U.S. and Europe. This geographical diversification will enhance their operational efficiency and responsiveness, strengthening their competitive edge.
ND3: Lastly, you mentioned strong R&D and financial capabilities are crucial for meeting AI-related demands. Can you elaborate on this?
EC: Certainly. In the fast-evolving AI sector, companies need to invest heavily in research and development to innovate and stay ahead of competitors. Quanta’s focus on R&D will be vital in ensuring they produce cutting-edge technology that can meet the demands of cloud service providers and enterprises looking to leverage AI. Financial capability also plays a key role; substantial investments are necessary to develop new technologies and expand operations, which Quanta seems prepared to do with their ambitious capital expenditure plan for 2025.
ND3: Thank you for your insights, Dr. Chen. It’s clear that Quanta Computer is strategically positioned for the future, especially in the realm of AI technology.
EC: Thank you for having me. I’m excited to see how Quanta will continue to navigate the changing landscape of technology.
Quanta is expanding its factories in Thailand, the U.S., and Europe. The company aims for sales of NT$10 billion to NT$12 billion in the first three quarters. The capital expenditure plan for 2025 is around NT$12 billion.
As cloud service providers focus on building computing power, Quanta emphasizes the need for strong R&D and financial capability to meet AI-related demands.