【Organization】Delta Electronics Capitalizes on AI Server Boom as EV Market Cools

31 May 2024

In the first quarter of 2024, Delta recorded its lowest earnings per share in four years. Chairman Yancey Hai acknowledged the slowdown in the electric vehicle (EV) sector during the company’s May shareholders meeting, signaling the end of the boom years in EV growth.

Consequently, Delta is pivoting to capitalize on the booming AI sector. AI server power sources contributed about two percent of Delta's revenue in 2023, doubling to four percent in the first quarter of 2024. Analyst Bruce Lu from Goldman Sachs highlighted that Delta supplies AC/DC power units and cooling systems for server arrays. Goldman Sachs estimates that Delta's AI-related revenue could reach 11 percent of its total revenue this year and potentially rise to 20 percent by 2025, positioning AI to surpass the EV sector as Delta’s primary growth engine.

Nvidia's latest B-series GPUs, which overheat due to high performance, have led Delta to transition from traditional air-cooling to complex liquid-cooling solutions. At Nvidia's annual GTC conference in March, an AI server cabinet at the ASUS booth featured a “Powered by Delta” logo, showcasing Delta’s liquid-cooling technology. This shift presents a significant opportunity for Delta, whose thermal management business is well-positioned to capitalize on this change.

Ares Chen, senior manager at Delta’s Power Supply and Systems Division, noted that Delta offers solutions from fans to liquid cooling. A Delta executive explained that Delta's integrated approach to designing power supplies, liquid cooling modules, and server cabinets into a single solution reduces size and eases maintenance. Goldman Sachs predicts rapid growth in Delta’s cooling business between 2023 and 2026, with an annual compound growth rate climbing from 10 to 33 percent, potentially contributing up to 10 percent of Delta’s total revenue by 2026.

Delta's high degree of vertical integration in power supplies stands out, with Delta being a leader in AC/DC electric power supplies for AI servers. This capability allows Delta to manage every stage of power delivery, eliminating compatibility issues often encountered when data centers source components from multiple suppliers. Delta’s power-saving technologies could be critical in addressing global electricity challenges, echoing Chairman Hai's philosophy: "Saving a kilowatt of electricity is often easier than generating one."

Parterning with Delta, NTU IMP is glad to offer internship opportunities for students to explore fields ranging from Engineering & Technology, Marketing Analysis to Human Resources Management.

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