Server ODMs demonstrated strong performance in the fourth quarter of 2024, driven by general purpose (GP) servers filling the gap as AI servers undergo a transitional period. ODMs project that AI servers will enter a renewed growth phase once production of Nvidia Blackwell GPUs ramps up in 2025.
Nvidia maintains its dominance in the AI server sector. The transition from Nvidia's Hopper GPU architecture to the Blackwell series is affecting the AI server shipment cycle. Quanta Computer indicated that AI server shipments will decrease quarter over quarter in the fourth quarter, primarily due to this transition. New platform products are expected to enter mass production by the end of the fourth quarter, with volumes becoming more apparent in the first quarter of 2025.
GP servers drive fourth-quarter growth
AI server and GP server shipments typically show an inverse correlation. In the fourth quarter, Quanta's AI server shipments declined compared to the third quarter of 2024, while GP server shipments rose. Combined with notebook shipments reaching 3.6 million units in November, up 400,000 units from October, Quanta's November revenue reached NT$141.35 billion (US$4.36 billion), increasing 4% month over month and 36.4% year over year.
Mitac Holdings, which derives more revenue from non-AI servers, saw revenue growth driven by pull-ins from a major American customer and steady automotive market demand. Mitac's November revenue increased 10.4% month over month to NT$7.89 billion, showing a remarkable year-over-year increase of 201.24%. Consolidated revenue from January to November totaled NT$52.95 billion, up 59.66% year over year.
AI server momentum to surge in 2025
Server supply chain manufacturers anticipate AI server momentum will resume once Nvidia Blackwell GPUs begin shipping in the fourth quarter of 2024, as some customers await Blackwell-equipped servers. Overall AI server momentum is expected to increase significantly following fourth-quarter shipments.
Quanta and Hon Hai Precision Industry (Foxconn) have confirmed that GB200 AI server rack shipments will commence in late 2024, with production scaling up in the first quarter of 2025. Quanta projects that AI server revenue in 2025 will achieve three-digit growth compared to 2024, which also experienced three-digit growth. Non-AI server revenue is expected to remain flat.
Inventec recorded peak server revenue in the fourth quarter, with momentum driven by Chinese and American customers. The company projects a 60% growth in AI server revenue for 2025, when AI servers will represent 30-40% of overall server revenue, up from 20-30%, while non-AI server revenue declines.
Inventec president Jack Tsai indicated that non-AI server shipments will decrease in 2025. Consequently, overall server revenue in 2025 is projected to increase by single digits or low double digits compared to 2024. He explained that companies' limited budgets mean reduced GP server purchases when prioritizing AI server acquisitions.
Component suppliers lead Blackwell transition
As AI servers undergo upgrades, component shipments are taking precedence over complete server rack assembly. Component suppliers are the first to experience the surge in orders that Nvidia CEO Jensen Huang predicts will accompany Blackwell. Sensor manufacturer FineTek reported that customers began accelerating orders in December, necessitating overtime work to meet demand, with suppliers following suit.
Wistron, which manufactures the Blackwell GB200 compute board, maintained double-digit growth in AI-server-related revenue during the fourth quarter. The company's triple-digit year-over-year growth target for 2024 remains on track, and it projects AI server revenue will sustain triple-digit growth in 2025.
Article translated by Eifeh Strom
