Chenming says second-half sales to further pick up

• By Meryl Kao / Staff reporter

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Chenming Electronic Technology Corp (晟銘電) expects revenue in the second half of this year to outperform its first half, supported by seasonal demand and shipments of rack and chassis products for Nvidia Corp’s new server platform starting this quarter.

Shipments previously delayed at end customers due to component shortages have returned to normal, providing strong momentum for the second half, Chenming Electronic president Charles Lo (羅志吉) told an earnings conference in Taipei yesterday.

NVIDIA SUPPLIER

Chenming Electronic Technology Corp president Charles Lo attends an earnings conference in Taipei yesterday.

Photo: Ou Yu-hsiang, Taipei Times

The company also expects to begin shipments of chassis and rack products for Nvidia’s Vera Rubin 200 platform this quarter, with artificial intelligence (AI) rack-related shipments expected to increase every month throughout the second half if supplies of key components, such as memory chips, are stable, Lo said.

In the first half of the year, the company’s revenue rose 22 percent year-on-year to NT$6.147 billion (US$193 million), and net profit increased 101 percent to NT$570.9 million, or earnings per share of NT$2.78.

Apart from racks and chassis for servers, storage systems, and industrial PCs, the company also produces high-voltage power racks and modular hardware systems, and is expanding into higher-value data center infrastructure, including Level 11 (L11) liquid-cooling system integration, manifolds and containerized modular data centers, Chenming Electronic research and development vice president Calum Chueh (闕仲輝) said.

In the first eight months of this year, server-related products accounted for 73 percent of the company’s NT$7.9 billion revenue, while Level 11 liquid-cooling systems contributed 18 percent, he said.

Based on its order backlog, Chenming Electronic expects its L11 system assembly business, including sidecars, liquid-cooled racks and related products, to continue growing next year, supporting a positive gross margin outlook, Lo said.

Gross margin rose to 21 percent in the first half of this year from 17 percent a year earlier, aided by improved production efficiency and factory performance, the company said.

PLANT INVESTMENTS

To meet increasing demand for racks and liquid-cooling products, Chenming Electronic continues to invest in plants in Taoyuan’s Jhongli District (中壢), Thailand’s Chachoengsao, as well as the Chinese cities of Dongguan and Ningbo, Lo said.

The first phase of its Thailand plant began small-volume production in the fourth quarter of last year, while the second phase is expected to begin production by the end of the year, he said.

The expansion at its Dongguan plant is expected to be completed by the end of this year, he added.

Capital expenditure is projected to stay at about NT$700 million to NT$800 million this year and next year, compared with nearly NT$700 million last year, Lo said.