Leading AI server manufacturer Supermicro, previously delisted in 2018 for non-compliance in financial reporting, has once again found itself in turmoil. Reportedly, if it does not submit its financial statements by November 20, it risks another delisting.
Server supply chain sources report that while Supermicro continues to perform strongly and has featured AI luminary Jensen Huang as a keynote speaker at COMPUTEX for two years, its credibility has taken a serious hit. The potential delisting now adds to the firm's mounting issues including further penalties and fines.
Observing the shifting dynamics in the AI server market, Nvidia has stepped in to mitigate the impact of Supermicro's challenges on the broader industry, seeking to stabilize the supply chain.
As Supermicro's self-inflicted issues continue to worsen, Nvidia has stepped in, reportedly redirecting Supermicro's client orders to other providers to contain the disruption within the AI server industry.
Amid Nvidia’s AI boom, Supermicro announced a 10-for-1 stock split in August 2024 following explosive growth in its stock and performance. CEO Charles Liang's COMPUTEX 2023 and 2024 speeches underscored Supermicro as the sole server company to feature Jensen Huang on stage.
In late August, Supermicro delayed its annual report. It then subsequently got hit with allegations of "accounting manipulation" from Hindenburg Research, which caused a steep stock decline for the firm. Ernst & Young (EY) subsequently resigned as auditor, citing concerns about the reliability of Supermicro's financial statements.
EY disclosed it had flagged issues with Supermicro's governance, transparency, and internal controls in late July. If the company fails to file its financial report by November 20, it faces potential delisting, having previously been delisted in 2018 and relisted in January 2020.
Supermicro's order redirection: Key beneficiaries
Nvidia's leadership in AI server products has led to similar designs across manufacturers, with minimal differentiation in structural components and modules, making it easy for clients to switch providers.
Supermicro's client orders have reportedly shifted to other players, with Gigabyte and ASRock seeing a surge in new orders and customer inquiries.
Supply chain sources indicate that Gigabyte and ASRock have benefited from Supermicro's rerouted orders, securing contracts with major clients like CoreWeave. Gigabyte, known for its high AI market concentration in Taiwan, has raised its fourth-quarter and annual server revenue forecasts.
Gigabyte initially projected 2024 revenue at NT$120 billion (US$3.75 billion) but has now raised this to NT$165 billion, a jump of over NT$50 billion from 2023. The company is also accelerating its deployment of liquid cooling technology to match Nvidia's rapid growth.
ASRock has reportedly gained redirected orders from Supermicro’s small and mid-sized clients, setting a record for third-quarter revenue. The fourth quarter is expected to peak, with annual revenue and profit forecasts revised upward. Second-half revenue is projected to represent 60% of the total, marking strong profit growth over 2022 and 2023.
With H200 shipments commencing in the fourth quarter, ASRock has joined the supply list for GB200 in the latter half of 2025. The company also plans to launch liquid cooling products, supporting profit growth expectations for 2025.
Supermicro's fallout: Key casualties
Supermicro's recent troubles have reverberated through its supply chain, affecting key partners like Leadtek, backed by Ablecom Technology and Compuware Technology. This dependency on Supermicro has raised concerns over Leadtek’s AI market share and performance. Similarly, Orient Semiconductor Electronics (OSE), a provider of packaging and testing services for Supermicro, faces potential disruptions impacting its operations.
Auras Technology, a supplier of thermal management solutions, and Argosy Research, a provider of electronic components, also found themselves caught by its impact. Both firms have faced reduced orders that may affect their standing in the AI sector. These companies, deeply integrated into Supermicro's supply chain, are cautiously managing the fallout amid shifting client demands and revenue concerns.
Ablecom and Compuware, whose chairmen are siblings of Supermicro's chairman, have close ties with the company. Their investment in Leadtek was reportedly driven by Leadtek's Nvidia Quadro distribution rights in China and its strong local network. The future impact of this investment on Leadtek remains uncertain.
Article translated by Levi Li
