ODM Inventec has expressed confidence in its business prospects for 2023, citing increased notebook, server, and smart device product line sales.
Inventec expects notebooks will see slight growth in 2023, while servers and smart devices witness double-digit growth, said company president Maurice Wu. He added that Inventec's inventory levels should return to pre-pandemic levels in the first quarter.
Despite notebook weakness, Inventec has benefited from new orders of Asustek Computer's gaming models. As a result, Inventec is expected to outpace its peers in 2023.
Benefiting from an increase in server shipments, Inventec saw its gross margin in fourth-quarter 2022 climb to 5.2%, up 1.1% on year.
Inventec pointed out that revenue from servers exceeded 40% in 2022, while revenue from notebooks fell 5% on year.
Inventec expects server shipments will remain flat in first-quarter 2023 compared with the same period in 2022 but hopes to see growth after the second quarter and for the year.
Inventec anticipates overall server revenue will grow by single digits this year, of which US-based cloud server revenue is expected to grow by low double digits while revenue from brand servers falls. Revenue from China-based cloud servers is expected to remain flat or decrease.
The proportion of server revenue from the first and second halves is estimated to be 45:55, according to Inventec Enterprise Business Group president Jack Tsai. Additionally, due to the high product unit price and the need to disperse production globally, Tsai said Inventec's inventory is on the higher end but still within a healthy level.
In response to reports of shipping issues with Intel and Advanced Micro Devices (AMD) next-gen processors, Tsai said he is not aware of any problems. However, he did note that under poor economic conditions and with incomplete infrastructure, customers are less willing to adopt next-gen processors. Tsai estimates the penetration rate of next-gen processors will reach 30-50% by the end of the year.
The recent popularity of ChatGPT has thrust AI servers into the spotlight. Tsai pointed out that GPUs are the focus during the design phase of so-called AI servers. In terms of customers, cloud customers are more willing to adopt AI servers. For ODMs, AI servers have a higher unit price and higher manufacturing costs but little impact on gross margin.
Tsai also mentioned the blacklisting of China-based Inspur Group by the US Department of Commerce, which he said could impact shipments. Tsai said the blacklisting may open up an opportunity for Inventec to seize some market share.
In regard to Dell's plans to stop using China-made chips, Tsai emphasized that Dell has not requested that Inventec leave China.
Inventec's annual revenue in 2022 reached NT$541.75 billion (US$18.09 billion), an on-year increase of 4.2%. Gross margin increased to 4.8% for an increase of 0.51% on year. Operating margin rose to 1.23%, up 0.32% on year, while net profit after tax increased 6.3% on year to NT$6.13 billion.
Article translated by Eifeh Strom
