Geopolitical tensions amongst the United States, China, and Taiwan are requiring a significant modification to server manufacturing, according to Asian market research company TrendForce, which forecasts that core parts of the server supply chain will ultimately shift to southeast Asia and the Americas.
According to TrendForce’s research, Taiwan-based initial style makers (ODM) currently represent about 90% of global server motherboard production. A significant exception is Supermicro, which has a 1.5 million square-foot factory in Fremont, California. It also has an 800,000 square-foot center in Taiwan.Ever given that the start of the trade dispute between the US and China beginning in 2018, server ODMs started looking at moving their assembly line from mainland China to Taiwan. Then, due to the explosion in building of information centers across the Asia-Pacific area, motherboard makers started taking a look at southeast Asian nations such as Malaysia and Thailand for capability expansion.Adding to the motivation to leave China and Taiwan was the saber rattling and increasingly bellicose tone from Beijing to Taiwan, in addition to fairly severe sanctions on semiconductor sales from the U.S. Department of Commerce. This has led some US-based cloud company, such as Google, AWS, Meta, and Microsoft, to take a look at including server production lines outside Taiwan as a precautionary step, according to TrendForce.There have been a number of other moves as well.
In the United States, 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 United States, 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 procedure were managed entirely by ODMs. In the future, the assembly job of a server project will be provided to not just an ODM partner but also a system integrator. The reasoning behind seeking a system integrator’s support is to improve the stability of the supply chain and hedge the risk of a shortage triggered by a geopolitical crisis, TrendForce says.Over the long term, TrendForce believes China’s and Taiwan’s shares of server production lines will diminish, and production lines will be more geographically dispersed and more regionalized in terms of operation. This will permit server vendors to spread threat and fulfill particular regional demands. Copyright © 2022 IDG Communications, Inc. Source