The visibility of server orders remains low despite an influx of short lead-time orders, according to Mitac Holdings president Bill Ho. Mitac's outlook for the year is conservative.
It is worth noting that Mitac took over Intel's prefabricated server manufacturing business and expects to begin shipment in July 2023. This is a new opportunity for Mitac, which mainly ships barebone servers.
President of Mitac subsidiary Mitac Computing Technology (MCT) Michael Lin pointed out that the average unit price of a complete server is 10 times higher than that of a barebone server.
The merger of this business can raise Mitac's revenue; however, Mitac will need to increase its investment and strengthen customer service, which will increase costs. While the impact on gross margin is still being evaluated, it is currently viewed as positive.
Of Mitac's two largest subsidiaries—MCT, which focuses on servers, and Mitac Digital Technology (MDT), which focuses on the automotive sector, MCT accounted for 77% of Mitac's revenue in the first quarter, followed by MDT with 15% and Mitac Synnex Group with 8%.
Mitac's revenue in the first quarter fell 20.31% on year, affected by economic factors. Net profit after tax fell 71.42% on year. Ho noted that overall demand fell significantly in the first quarter across applications, as customers continued with inventory corrections. Ho expects performance will slightly improve in the second quarter, adding that visibility in the second half of the year is low.
Lin said the second quarter should outperform the first. He estimates the second half will be on par with or improve compared with the second quarter, indicating that performance bottomed out in the first.
Business from MCT's server business customers is split half-and-half between enterprises and large-scale data centers from China and the US. Shipments among MCT's Chinese and American data center customers are comparable; however, revenue from American data centers is higher. Lin expects shipments from enterprise customers will grow, while shipments for data center customers remain flat or slightly decrease on year.
In terms of AI servers, MCT mainly ships barebone AI servers, according to Lin, noting that the proportion shipped is based on customer pull-ins and can reach 10-20% in a single month during peak times. Lin added that there is an opportunity for MCT to ship complete servers in the short term, which would increase the revenue from AI products as the gross profit from AI products is higher.
Since MCT mainly ships barebone servers, it will work closely with systems integrators on AI products.
Article translated by Eifeh Strom
