Taiwan-based server ODMs have expressed caution about their sales prospects for the first quarter of 2023, citing significant adjustments in customer orders, according to industry sources.
Server supply chain sources believe the long-term market outlook is good, but there may be fluctuations in the short term. Still, growth is expected in 2023, driven by China-based data centers and the government loosening control of cloud services.
Sources said that fluctuations in server orders and news of reported layoffs at US-based data centers have caused companies, such as Microsoft, Intel, and Advanced Micro Devices (AMD), to take a more conservative stance on the first quarter of 2023.
During its fourth-quarter 2022 financial report meeting, Intel CEO Pat Gelsinger stated that widespread inventory adjustments have affected data center demand. As a result, Intel expects data center demand will be weak in first-half 2023.
Microsoft noted that Azure demand is easing during its second-quarter 2023 financial briefing, adding that Azure's revenue growth this quarter will also slow.
In the previous quarter, Azure's revenue increased 31% on year but is expected to fall 4-5% this quarter. Even so, Microsoft emphasized that enterprise cloudification is only in its beginning stages and will continue to grow in the future. For this reason, Microsoft has not changed its capital expenditure related to data centers.
AMD recently announced its fourth-quarter 2022 financial report, which showed an impressive growth of 42% on year for data center servers. However, data center revenue is expected to fall in first-quarter 2023, due to increased inventory levels of cloud service customers.
Taiwan-based server ODMs pointed out that customers began making bigger order adjustments in the middle of fourth-quarter 2022 and expect adjustments to continue in first-half 2023. While growth may not be as good as in 2022, they believe overall growth can be maintained in 2023.
Inventec expects its shipments for US-based data centers will see 10-15% on-year growth in 2023. Enterprise demand is estimated to be on par with 2022, while momentum for China-based data centers is less clear. Overall, Inventec expects its server shipments will grow by single digits compared to 2022.
Quanta Computer expects to maintain double-digit growth in server revenue in 2023, but will be less than in 2022 due to larger environmental impacts.
Wiwynn is optimistic about the long-term demand for data centers but has yet to comment on its outlook for 2023, only noting that short-term visibility is not very high.
Article translated by Eifeh Strom
