Delta Electronics Earnings Call: Chairman States AI Development Shows No Signs of Slowing, Capex to Reach NT$70 Billion This Year

Delta Electronics (2308-TW) held its earnings call today (30), where Chairman Frankly Cheng stated that there are no signs of AI development slowing down. He expects stronger operational performance in the second half of the year and confirmed ongoing factory expansions, with capital expenditures projected to reach NT$70 billion this year—up approximately 50% from last year’s NT$46.6 billion.

Cheng emphasized that once AI is adopted, there is no turning back—usage will only increase. With related demand continuing to grow and Q3 traditionally being the peak season, Delta anticipates better performance in the second half compared to the first. However, he cautioned against overly optimistic expectations for gross margins, noting that the current 35% level is already quite reasonable.

Liu Liang-Fu, Vice President of Corporate Investment, added that major cloud service providers (CSPs) that have released financial results have met both revenue and cash flow targets. Regarding capital expenditures, each CSP has announced plans to maintain or even slightly increase spending. Although specific 2027 capex figures have not been disclosed, the trend suggests that AI data center construction will not slow down in the near term.

On product developments, Delta expects ±400V and 800V HVDC (high-voltage direct current) products to enter mass production in Q3 and begin shipping in Q4, with volume ramping up significantly in 2025. AI-related products are projected to account for over 25% of revenue this year, up from 18% last year, while liquid cooling solutions will represent more than 12% of total revenue.

In other business segments, the EV market has not shown clear signs of recovery this year, but Delta remains committed to long-term R&D collaborations with customers. Building automation has faced component supply constraints—particularly memory—leading to delayed shipments in the first half. However, with secondary suppliers coming online, shipments are expected to normalize in the second half.

On capacity expansion, Cheng noted that AI demand is extremely strong and current production capacity is tight. Delta is expanding manufacturing simultaneously in Taiwan, China, the U.S., and Thailand. The new Thai facility will significantly boost output. Second-half capex is estimated at NT$40 billion, bringing the full-year total to around NT$70 billion.