Pegatron plans production in U.S. amid Trump tariff threats

Taipei, March 14 (CNA) Pegatron Corp., a leading Taiwan-based artificial intelligence server maker, is planning to build a factory in the United States to serve American clients that the company said should begin operations later this year.

The move, announced by Pegatron co-CEO Gary Cheng (鄭光志) at an investor conference Thursday, came at a time when the Donald Trump administration in the United States has been threatening tariffs against imports of goods from around the world.

The company currently has an AI server production base in Taoyuan in northern Taiwan, Cheng said, and it is planning a new facility in the U.S. scheduled to begin commercial production later this year.

Echoing Cheng, co-CEO Johnson Teng (鄧國彥) said Pegatron's capital expenditure for 2025 is expected to be increased from the previously planned US$300 million to US$350 million because of the plan to invest in the U.S.

The move follows that of two other Taiwanese AI server producers, Compal Electronics, Inc. and Inventec Corp., which announced in January and February, respectively, that they were looking to invest in manufacturing facilities in Texas.

Another Taiwanese AI server supplier, Wistron Corp., already had factories in Texas and California and said in February that it would be able to adjust its production capacity in those locations as required by its clients.

Cheng voiced confidence in the prospects for the U.S. production base, saying that American clients had expressed satisfaction with Pegatron's GB200 AI servers powered by Nvidia Corp.'s graphics processing units after they were sent to the U.S. for testing.

He said the test results were even better than products from some of its competitors and thought it likely that his company would attract more clients.

Pegatron posted a net profit of NT$16.88 billion (US$512 million) in 2024, up 7.4 percent from a year earlier, with earnings per share of NT$6.34, the highest in three years.

Its consolidated sales totaled NT$1.13 trillion, down 10.5 percent from a year earlier but its gross margin -- the difference between revenue and cost of goods sold -- rose 0.4 percentage points to 4.1 percent on an improvement in production efficiency.

Looking ahead, Teng expected the company's business to slow down in the first quarter but improve in the second quarter as its clients unveil new products to encourage replacements and uncertainties posed by Trump's tariff actions could be partly removed.