Speaker 1: Now time on his industry. Giant fox Con is holding
Speaker 1: its annual tech Day in Taipei. The company, known formally
Speaker 1: as hot High, is the largest contract electronics maker in
Speaker 1: the world, and now it's pushing to diversify and build
Speaker 1: more future proof income streams. That's the hope at least
Speaker 1: our tech report. Annabel Dreolism joins us from the event. Annabel,
Speaker 1: thanks Tom.
Speaker 2: Yeah, this is a really big day for Ho Hi.
Speaker 2: It's the fiftime I've ever held its tech day. It's
Speaker 2: also the fiftieth anniversary this year of the company. And
Speaker 2: is you said, it's that focus on what are the
Speaker 2: future growth drivers for the business, and there's no question today,
Speaker 2: yes there's the focus on AIS but rather evs, but
Speaker 2: AI service is really what's grabbing a.
Speaker 3: Lot of investor attention as well.
Speaker 2: And I'm very pleased to say that we're joined by
Speaker 2: the chairman, Young Lou this afternoon, and thank you very
Speaker 2: much for joining us. And as we said, is really
Speaker 2: so much attention is on the AI service and the market.
Speaker 3: Share that you're gaining in this area.
Speaker 2: In particular, you just said earlier on stage that sales
Speaker 2: of AI service made with Blackwell ships are doing better
Speaker 2: than expected.
Speaker 3: Can you share more details about what you meant by that?
Speaker 4: Yeah, the black Well demand very very strong, as Jameson
Speaker 4: College is crazy. The demand is crazy, and we're building
Speaker 4: up the capacity, and the capacity, as we mentioned, is
Speaker 4: probably very very big, much bigger than we thought so
Speaker 4: so far. The shipping day will be sometime by the
Speaker 4: end of the year.
Speaker 2: So you're planning to start the shipments of servers and
Speaker 2: the demand is better than you expected. What were you
Speaker 2: expecting and what are you actually seeing? Can you quantify
Speaker 2: it for us?
Speaker 4: Okay, because there were a lot of saying about, you know,
Speaker 4: the compute. The need for the compute may be saturated
Speaker 4: pretty soon, but it looks like that the demand is
Speaker 4: still growing. So that's you know, that's beyond our expectation.
Speaker 2: Again, if it's beyond your expectation, what was your expectation?
Speaker 2: How many, for instance, were you planning to ship by
Speaker 2: the end of the year. How many you actually looking
Speaker 2: to ship instead?
Speaker 4: Yeah, if you talk about our shipping plan, I would
Speaker 4: say we planned to ship in the beginning of Q four,
Speaker 4: but due to certain peacup with the super chip, so
Speaker 4: it's moving later to the later part of the Q
Speaker 4: four from that angle, it's worse than what we expected,
Speaker 4: but the demand is much bigger than our expect.
Speaker 2: So the shipman you expected to come earlier in the
Speaker 2: fourth quarter, it's been delayed to the fourth quarter. The
Speaker 2: demand that you're seeing is actually better than expected. Again,
Speaker 2: can you share more quantity, like how much of the
Speaker 2: demand are you trying to capture here?
Speaker 3: How much of the market?
Speaker 4: But that I really cannot give you the quantity, exact
Speaker 4: quantity because we just started to build it, Okay, but
Speaker 4: we see the demand is over what we you know,
Speaker 4: we can shift.
Speaker 2: So if you can't meet the demand right now, how
Speaker 2: long do.
Speaker 3: You see that extending?
Speaker 2: For?
Speaker 3: What sort of sales do you have.
Speaker 2: Booked going into next year as well?
Speaker 4: We see in yeah, maybe somewhere around quanity thousand, that
Speaker 4: kind of a number.
Speaker 2: You're looking to ship twenty thousand AI service maybe with
Speaker 2: black Well ships over the course of next year, is
Speaker 2: that right right?
Speaker 3: Okay?
Speaker 2: And in any particular quarter that you're looking at in
Speaker 2: particular for that or do you see.
Speaker 3: It being that's a year per quarter?
Speaker 2: Are you expecting a bulk of those to go on
Speaker 2: one particular quarter or do you see it spread evenly
Speaker 2: across the course of this year or next year.
Speaker 4: Rather, it really depends on once we start shipping the demand,
Speaker 4: whether the demand will will change or not. If the
Speaker 4: demand doesn't change after we start shipping and the demand
Speaker 4: or maybe it will be even higher than we.
Speaker 2: Expected, well, what's what sort of capacity?
Speaker 3: Then? How much can you ramp up production?
Speaker 2: Do you think how many of these service could you
Speaker 2: be providing to the market?
Speaker 3: Do you think, Hm, okay, but that that.
Speaker 4: Really cannot give you the number because the facility is there,
Speaker 4: but the equipment is being put there, and also the
Speaker 4: power needed to build those servers. You know, they require
Speaker 4: a lot of power to do that, so that's also
Speaker 4: been prepared. So the capacity of that, I really can't
Speaker 4: give you that number from my head. I had to
Speaker 4: go and check it out, right, I don't want to
Speaker 4: give you the Ryan inspectation.
Speaker 2: The demand that we see from hyperscalers, there has been
Speaker 2: that big question sort of hanging over AI for the
Speaker 2: course of the year. Would we start to see any
Speaker 2: concerns around that fading? Do you see any of the
Speaker 2: customers that you speak with them.
Speaker 3: I'm speaking here.
Speaker 2: About the hyperscalers that are looking like they maybe need
Speaker 2: to pause on investments for a period to wait and
Speaker 2: see if they if they actually do see ROI.
Speaker 4: We haven't seen any of that. We haven't seen any
Speaker 4: of that concern. But you've probably heard some analysts talking
Speaker 4: about that concern, but from the market, we don't see.
Speaker 4: We haven't heard any concern like that.
Speaker 2: And video has very tight control over the designs of
Speaker 2: its products. How closely do you work with the company
Speaker 2: to add your own value to the designs as well
Speaker 2: your own expertise?
Speaker 3: I'm thinking energy for instance, is one area in the calling.
Speaker 4: Technology mentioned in the past that fast Come is most
Speaker 4: integrated vertically integrated the supplier to the server industry. If
Speaker 4: you don't account TPU, CPU and some minor ic components,
Speaker 4: the component the percentage that we are able to cover
Speaker 4: by ourselves is anywhere between eighty to ninety percent. That
Speaker 4: tells you how vertically integrated that we are capable of.
Speaker 2: When you add that sort of value to the company
Speaker 2: or to Nvidio's designs, how much value do you extract
Speaker 2: as a business and how much can you differentiate yourself
Speaker 2: as opposed to other AI server resemblance and.
Speaker 4: The differentiation in terms of the vertical integration capability, Yes,
Speaker 4: we are one of the best. But in terms of
Speaker 4: what added value to the overall.
Speaker 2: The over.
Speaker 4: Server, I think it really depends on how much uh
Speaker 4: Mmediate is pricing their CPUs and gp us. That definitely
Speaker 4: will impact our gross popular margin.
Speaker 3: In terms of proper margin.
Speaker 2: Then what I understand for the AI service, it can
Speaker 2: be in the load teens. Do you see a way
Speaker 2: to expand that and too increases.
Speaker 4: I think in the low teams you're probably right, but
Speaker 4: that will have to be based on, you know, how
Speaker 4: much vertical integrate, how much components that you're able to provide.
Speaker 4: So with that it varies to a certain degree. But
Speaker 4: because the CPU and GPU is very high priced, so
Speaker 4: the rest of the server, you know, has only some
Speaker 4: limited impact in terms of a cord overall.
Speaker 3: Right, Chairman, stay with us for a moment.
Speaker 2: Tom will hand back to you now for this portion
Speaker 2: of the interview.
Speaker 3: But Chairman, if I cannot continue, to ask you some further.
Speaker 2: Questions, and this is around the shift to the smartphone
Speaker 2: and space in particular.
Speaker 3: Yes, okay, I want to talk more about the Thank
Speaker 3: you very much,