The Taiwanese government recently held a briefing with 20 Information and Communication Technology (ICT) industry leaders. According to a DigiTimes report on the event, which took place at a technology park in Taoyuan in the north of the island, Taiwan currently dominates the artificial intelligence (AI) server market. The numbers are both astonishing and concerning. Astonishing: the scale of the Taiwanese industry's success, having captured 90% of the global AI server market. Concerning: the potentially precipitous geopolitical situation, given that US-branded AI servers are 100% reliant on Taiwanese manufacturing.
Taiwan’s Ministry of Economic Affairs (MOEA) organized the meeting between government and industry leaders. Among the government representatives was President-elect Lai Ching-te, who is set to begin his term on May 20, and 20 ICT leaders. Among the industry heavyweights were trade association chairs representing electronics manufacturers, display makers, and PCB manufacturers - and chairmen of well-known companies like Acer and Quanta.
The report indicates that the event's purpose was to look at current ICT industry operations and sketch out areas of growth and potential. From Taiwan’s point of view, there remains a great opportunity in AI servers. Attendees at the event heard how AI server demand is high, prices are high, and quotes have continued to increase sharply.
AI server components are experiencing similar price action. According to the DigiTimes report, key components for AI servers were much more expensive than those bought for general server products. For example, it is claimed that substrates for AI chips are priced nearly 10 times higher than those for general server chips. Similar price multiples were noted for AI server-bound PSUs, passive components, and cooling equipment.
Taiwan’s share of the server market by the numbers
As well as being responsible for the vast majority of the world’s most advanced semiconductor manufacturing facilities, Taiwan makes 83% of the world’s servers, according to the MOEA. For AI servers the percentage climbs to 90%, and when factoring American brand vendors it is 100%.
While those numbers may be very pleasing for the island’s government and heads of industry, looking in from the outside it is easy to feel concerned. Governments in the US and EU have started investing heavily in promoting local semiconductor manufacturing ecosystems to reduce any potential for economic shock from a military conflict across the Taiwan Strait.
Taiwan is actually helping to reduce the geo-concentration of several industries, as we have seen recently with investments in the US and Japan by TSMC. Moreover, the recent MOEA-sponsored get-together highlighted Taiwanese companies making increasing strategic investments in places as diverse as Germany, the Czech Republic, Hungary, India, Thailand, Indonesia, Vietnam, Malaysia, the US, Mexico, and Brazil.
Other interesting stats from MOEA were that Taiwan manufacturers output 78% of the world’s laptops and 55% of PCs. The government and industry heads also mulled topics like 6G, sustainability, low-carbon manufacturing, green energy, and attracting top-tier talent to the island.
