Taiwan to keep high-value server work despite overseas shifts: Expert

Taipei, Sept. 8 (CNA) Taiwan is expected to retain higher-value server activities such as GPU board production and next-generation product development even as more manufacturing capacity moves overseas, a Taiwanese industry analyst said Tuesday.

Lin Bo-chi (林柏齊), deputy director general of the Institute for Information Industry (III)'s Market Intelligence & Consulting Institute (MIC), said Taiwanese server makers will continue expanding production abroad to meet customers' demand for U.S.-based manufacturing.

"But this does not mean the companies are leaving Taiwan," Lin told reporters on the sidelines of the MIC Forum in Taipei.

Although the share of Taiwanese manufacturers' output produced in Taiwan may decline, the value of server production in the country will continue to grow as the global market expands, he said.

MIC forecasts global server shipments will grow 12.4 percent in 2027, driven by continued investment in AI infrastructure by cloud service providers and AI model developers. AI server shipments alone are projected to rise 17.8 percent to 5.4 million units that year.

GPU board production is among the activities likely to remain in Taiwan, Lin said, because the country is home to TSMC and a broader semiconductor supply chain.

The design and prototyping of advanced, next-generation server products are also likely to be conducted in Taiwan first, he added.

By contrast, later-stage production, including L10 server assembly and L11 rack integration, is more likely to take place overseas, Lin said.

"If I have to assemble a rack in Taiwan and then ship it overseas, why not just assemble it overseas?" he said, noting that Taiwan lacks comparable domestic demand for computing capacity.

MIC's presentation showed that Taiwanese server makers are expanding production in the U.S., Mexico and Southeast Asia to meet customers' local manufacturing requirements.

The shift could eventually extend beyond later-stage assembly, Lin said, adding that a larger share of L6 board-level production could move overseas as manufacturing capabilities improve and costs fall in places including Vietnam, Thailand and Mexico.

The transition will be gradual, however, as overseas production sites develop the necessary capabilities and supporting supply chains, he said.

Taiwan, meanwhile, is likely to retain advanced design, prototyping and other higher-value activities that benefit from its semiconductor ecosystem, Lin added.