The ongoing trade disputes between the US and China continue to affect negatively China's datacenter market, with recovery unlikely to take place until the end of 2019 or even 2020, according to sources at server and related device makers.
The sources expect North America to be the main growth driver for the datacenter server industry in 2020.
The Mitac Group's cloud computing affiliate Mitac Computing Technology, which has clients from US first-tier datacenter players and China's server brands, also agrees that China's server market has been underperforming in the second half of 2019, but does not expect the company's sales growth to be affected.
At the moment, most China-based datacenter players are re-evaluating their demand for new hardware amid the impacts on the local economy from the trade tensions, while Chinese server brands such as Huawei and Sugon have also experienced shipment declines due to the US trade ban, the sources said.
Server chassis maker Chenbro Micom originally expected its second-half 2019 sales in China to rebound significantly from the first, but the actual growth will now be far weaker than expected. Chenbro now expects its annual sales in China in 2019 to increase only by a single-digit percentage, instead of a double-digit one estimated earlier.
Chenbro is now turning to focus on expanding its capacity in Taiwan and may obtain orders from clients in Southeast Asia and North America, the sources said.
Meanwhile, demand from the US datacenter center market is rising rapidly with the top-4 cloud computing players including Amazon, Microsoft and Google all confirming they will be investing in datacenter expansions. Most upstream suppliers have already seen increased order pull-ins from clients for the second half, the sources revealed.
Inventec, currently the largest server motherboard supplier, saw better-than-expected results in October and raised its server shipment forecast for the fourth quarter due to clients from North America ramping up their orders exponentially, the sources said.
Wiwynn saw its October revenues pick up 37.48% on month to come to NT$15.49 billion (US$505.13 million), but its overall 2019 revenues are expected to slip on year as a result of slipping memory prices, despite shipment growth,
The sources expects demand from US-based datacenter clients to remain strong in the first half of 2020 driven by 5G and AI, but so far, there has been no sign when China's datacenter market will recover.
China datacenter demand undermined by US-China trade tensions
Photo: Digitimes file photo
Article translated by Joseph Tsai
