Home Internet technology Server supply chain undergoes shift due to geopolitical risks

Server supply chain undergoes shift due to geopolitical risks

0
Server supply chain undergoes shift due to geopolitical risks

[ad_1]

Geopolitical tensions among the US, China, and Taiwan are forcing a notable change to server manufacturing, according to Asian market research firm TrendForce, which predicts that core parts of the server supply chain will eventually shift to southeast Asia and the Americas. 

According to TrendForce’s research, Taiwan-based original design manufacturers (ODM) currently account for about 90% of global server motherboard production. A notable exception is Supermicro, which has a 1.5 million square-foot factory in Fremont, California. It also has an 800,000 square-foot facility in Taiwan.

Ever since the start of the trade dispute between the US and China beginning in 2018, server ODMs began looking at moving their production lines from mainland China to Taiwan. Then, due to the explosion in construction of data centers across the Asia-Pacific region, motherboard makers began looking at southeast Asian countries such as Malaysia and Thailand for capacity expansion.

Adding to the motivation to exit China and Taiwan was the saber rattling and increasingly bellicose tone from Beijing to Taiwan, along with fairly severe sanctions on semiconductor sales from the U.S. Department of Commerce. This has led some US-based cloud service providers, such as Google, AWS, Meta, and Microsoft, to look at adding server production lines outside Taiwan as a precautionary measure, according to TrendForce.

There have been a number of other moves as well. In the US, Intel is spending $20 billion on an Arizona fab and another $20 billion on fabs in Ohio. TSMC is spending $40 billion on fabs in Arizona as well, and Apple is moving production to the US, Mexico, India, and Vietnam.

TrendForce also noted a phenomenon it calls “fragmentation” as an emerging model in the management of the server supply chain. It used to be that server production and the assembly process were handled entirely by ODMs. In the future, the assembly task of a server project will be given to not only an ODM partner but also a system integrator.

The rationale behind seeking a system integrator’s assistance is to enhance the stability of the supply chain and hedge the risk of a shortage caused by a geopolitical crisis, TrendForce says.

Over the long term, TrendForce believes China’s and Taiwan’s shares of server production lines will shrink, and production lines will be more geographically dispersed and more regionalized in terms of operation. This will allow server vendors to spread risk and meet specific local demands.

Copyright © 2022 IDG Communications, Inc.

[ad_2]

Source link

LEAVE A REPLY

Please enter your comment!
Please enter your name here