Looks like there’s been a recent story from Supermicro about its expanding manufacturing facilities around the world. Additionally Charles Liang did an interview on CNBC recently, links below,
The first story is from today and says they will be expanding their San Jose, Silicon Valley campus. The CNBC interview mentions they are expanding in Taiwan and Malaysia right now as well.
The first story doesn’t specify how much they are expanding by in Silicon Valley, so this is not a huge announcement. However, I believe some details mentioned by Charles Liang reveal some of their more ambitious plans,
CEO mentioned they expect that liquid cooled data centers grow from historically less than 1% to an expected 15% and up to 30% of all data center installations in the next two years (They expect the market to grow massively for liquid cooling)
Liquid cooled data centers increase the amount of AI computer performance per watt, resulting in more performance per data center
Electricity consumption and environmental impact are reduced, and operational expenses can be up to 40% lower cost compared to traditional air cooled data centers
Supermicro says they have the highest performing generative deep learning and inferencing AI platform and clusters which benefit from liquid cooling
The Twitter link to the CNBC interview the CEO says they are expanding “campuses” in Silicon Valley, Taiwan, and Malaysia. Additionally,
Largest backlog ever
Example of a customer, “Hey, are you sure you can deliver it in volume?”, huge order that immediately went for liquid cooling (I believe this is Meta and Mark Zuckerburg here)
Back orders growing like crazy
Seems like Supermicro is trying to ramp up production and they are doing a decent job getting the word out there. Their CapEx and leverage on the business is expanding by building out their factories. I believe it will be well worth it for them to be playing the long game by investing aggressively behind their growth.
During the BofA conference a couple of weeks ago SMCI’s CFO said the plant expansion in Taiwan and the new factory in Malaysia were intended to provide product primarily to their Asian customers.
He said it didn’t make a lot of sense to ship components from Asia to Silicon Valley in order to assemble racks that they then send back to Asia. I imagine if necessary they will ship products from where ever they have finished goods inventory to fill customer orders irrespective of where they are, but the intent is primarily to reduce shipping products and supply chain logistics.
That’s a good callout. On their last earnings call Asia was their fastest growing geographic segment. Asia made up 20% of revenue growing 257% yoy, and 17% sequentially. Having the factories directly in Taiwan and Malaysia will even further Supermicro’s time to market competitive advantage which is already the best in the industry.
I am interested to find out who their major customers in Asia are. There does not seem to be any public information disclosing large customers in Asia, and I am wondering if that could mean that a sovereign government is a buyer.
One thing to note with their recent factory announcements, they made no mention of expanding their Netherlands facility which is 800k sqft, or the smallest of their campuses. It sounds like Europe’s spend is still far behind North America and Asia. I’m guessing European countries and companies will have to play catch up on their AI spend soon.