Nvidia partners expect AI server sales to double by 2024

Nvidia Corp.’s major partner Quanta Cloud Technology (QCT) expects its artificial intelligence (AI) server sales to double by 2024 and demand will remain high in the long run as businesses add AI to their operations and services.

In an interview with Bloomberg Television, Mike Yang, chief executive officer of QCT, a wholly owned subsidiary of Quanta Computer Inc. Taiwan, said: “The real AI boom will take place and we will see its development get stronger and stronger in the coming years.”

Quanta Computer, which partnered with Nvidia to build AI servers, has benefited greatly from Wall Street betting on the technology as the next big step. Like its Santa Clara, California-based chip-making partner, where AI accelerators are mainstream this year, Quanta’s stock price will more than double in 2023.

While he did not commit to meeting all of their customers’ needs next year, Yang said various component suppliers are working together to increase production capacity and help alleviate the country’s shortage of advanced AI chips. Nvidia is happening. Nvidia’s CEO has assured analysts that this month, they are confident supply will grow rapidly to meet growing demand.

“We have a very limited supply, but I think next year Nvidia will solve everything,” Mr. Yang said.

Mr. Yang said QCT generates billions of dollars in revenue every year, of which AI servers account for 65% of the company’s total revenue. An AI server is a server that includes a graphics processor, such as models made by Nvidia, with traditional processor-driven hardware in which Intel Corporation still dominates the market share.

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Alphabet Inc’s Google Cloud, Amazon.com Inc. AWS and Alibaba Group Holding Ltd. are QCT’s biggest customers. The company competes with Foxconn Industrial Internet Co in Shanghai and Vivin Corp in Taiwan to provide servers mainly to cloud service providers in the US and China.

According to Taipei-based research firm Trendforce, the number of AI servers shipped globally is expected to grow at a compound annual rate of 29% from 2022 to 2026. Analysts and researchers has given overly conservative estimates this year, as Nvidia surprised the market with consecutive negative revenue forecasts for many quarters.

In late May, Nvidia CEO Jensen Huang visited QCT’s booth at a technology fair in Taipei. Mr. Yang said the two companies first started working together to develop server products in 2015.

Like many other manufacturers, Mr. Yang is closely watching the US-China trade conflict. The executive said QCT is looking to develop production lines in the US, Germany and Thailand, while maintaining existing production capacity in China. Companies cannot rule out China because it is a key market.

“I believe China is still the largest market,” Mr. Yang said. “Every company will still be focused on both China and the rest of the world.”