Alongside the growing application of generative AI technology, the ongoing trend of AI servers adopting multiple GPU architectures is seen to bring various new business opportunities for Taiwan's supply chain players, particularly vendors of high-speed networking chips and equipment, according to industry sources.
It is widely expected that the AI server production value will experience a nearly 50% annual increase in 2023 and 2024, becoming a major growth driver for the entire server industry. This will benefit related regular supply chain segments such as cooling solutions, system assembly, power supply and PCB components, the sources said.
But from the perspective of a broad system architecture, it is anticipated that Taiwanese suppliers of high-speed network communication chips and equipment will also embrace a new chance for their operational expansions, the sources stressed.
The biggest difference between AI servers and traditional servers lies in the upgrade of computing power, and to meet massive data transmission demand of AIoT, both main network and edge network architectures need to possess more powerful high-speed transmission capabilities to handle peak traffic variations and performance requirements, the sources said.
The ongoing wave of network performance improvement triggered by AI will undoubtedly bring new business opportunities for networking chips and equipment suppliers, the sources remarked, adding that the Broad Equity, Access and Deployment (BEAD) Plan recently proposed by US President Joe Biden is also expected to open a new window of opportunities for Taiwan's network communication supply chain players.
The BEAD program will allocate US$47 billion for upgrading national infrastructures, US$65 billion for expanding high-speed broadband networks, and another US$7.5 billion for building EV charging networks and supporting EV production.
But the procurement guidelines set by the US entail a basic requirement of compliance with American manufacturing. For instance, the proportion of US-made components in the procured products is required to immediately rise from the existing 55% to 60%, then to 65% in two years and further to 75% seven years later. Furthermore, in bidding for critical infrastructure equipment orders, non-US suppliers may face price increases of 20-30% compared to US-made products, which appears to create entry barriers for Taiwanese manufacturers seeking to share a piece of lucrative US infrastructure market pie.
However, these new challenges may also present new opportunities for Taiwanese suppliers of networking chips and equipment, supply chain sources said, as they can take the chance to reevaluate their global expansion strategies, resource allocations and manufacturing deployments to align with the trend of regional decentralized production, eventually enhancing their operational resilience and successfully adapting to the changing fixed broadband and mobile broadband demands.
The sources continued that the development of EVs and connected cars will also generate new opportunities for network communication chips and devices suppliers. In this regard, they said, cars are seen as the fourth 'C" that Taiwanese makers can develop further beyond communication, consumer and computer devices. There is a wide range of innovations, technologies and applications in the car industry, particularly in the development of connected cars. Among them, the most frequently mentioned technology is still V2X (vehicle-to-everything) applications based on connectivity.
The concept of V2X is mainly based on vehicles, road infrastructure and cloud architecture, enabling seamless integration and information sharing for vehicles to vehicles (V2V), vehicles to pedestrians (V2P) and vehicles to networks (V2N). This allows for real-time transmission of traffic and road information to enhance driving safety.
In particular, the demand for low latency, high bandwidth, and high-speed networks will be great and undoubtedly become a major growth driver for the network communication supply chain players in the future, the sources concluded.
Article translated by Willis Ke
