PC vendor Asustek Computer Inc (華碩電腦) yesterday said it expects server revenue growth this year to exceed the annual growth rate of 50 percent last year, ahead of the company’s five-year target to increase the new business revenue by five times.
While generative artificial intelligence (AI) applications grow rapidly, government agencies and large-scale private businesses worldwide are keen to build AI-enabled data centers, the Beitou District (北投), Taipei-based company said.
AI servers are expected to make up 70 percent of the company’s total server offerings this year, doubling from last year’s 35 percent, Asustek said.
Photo courtesy of Asustek Computer Inc
The expansion was more drastic than the 10 percent increase in 2022, Asustek said.
“Our [AI server] customers include government agencies and major businesses mostly from the Asia-Pacific region with a minority from Europe. They are all eager to build data centers for data training,” Asustek cochief executive officer Samson Hu (胡書賓) told investors in a quarterly conference yesterday.
Given such strong demand, Asustek expects server business to become a bigger revenue contributor this quarter, at about a high-single-digit percentage of the company’s total revenue, it said.
In addition to AI servers, AI PCs would be essential to the company’ growth from the second half of this year, when new models are to be equipped with a neutral processing unit for executing machine learning algorithms and Microsoft Corp’s new chat assistant system, Copilot.
“PC demand remains sluggish in the first half of this year, but generative AI [applications] trigger the so-called ‘fourth industrial revolution,’” Asustek co-CEO S.Y. Hsu (許先越) said. “From the second half, the PC market is to usher in a new growth cycle. It will last for several years.”
The global PC market might grow at a low-single-digit percentage each year in the next few years, after growing 2 to 3 percent year-on-year to 260 million units, reversing a down cycle before the COVID-19 pandemic, Hsu said.
The company expects an expeditious penetration of AI PCs in the next three years, Asustek said.
AI PCs are expected to account for at least half of all PCs worldwide in 2026, it said.
In the near term, Asustek expects its PC revenue to contract 10 percent quarter-on-quarter during the first three months of this year, matching the seasonal pattern, it said.
Component revenue is expected to grow 15 percent to 25 percent sequentially this quarter, thanks to strong growth momentum in AI servers, Asustek said.
The company yesterday reported a quarterly decline of 65 percent in net profit for the fourth quarter of last year at NT$3.93 billion (US$124.4 million), compared with NT$11.1 billion. That was an improvement from losses of NT$3.82 billion in the fourth quarter of the previous year, due to excessive inventory.
Last year as a whole, net profits grew 8 percent to NT$15.93 billion from NT$14.69 billion in 2022. That translated into earnings per share of NT$21.1 last year, up from NT$19.8 in the prior year.
Gross margin improved to 13.6 percent last year from 12.8 percent a year ago. Operating profit margin sank to 1.9 percent last year from 2.1 percent the previous year.
The company said it aims to boost its operating margin to 4 percent in the long term.
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