Wistron Earnings Call: AI Server Business to Outperform in Second Half, Networking Segment Expected to Grow Over 10x

Wistron (3231-TW) held its earnings call today (4th). CEO Jason Lin stated that demand for AI servers remains strong. In addition to continued momentum from existing customers, the company has secured new clients in both enterprise and CSP segments, expecting its AI server business in the second half to outperform the first half.

According to customer forecasts, AI server demand for Q3 and the second half remains robust, with growth anticipated across both component and system businesses. The company expects stronger performance in the second half compared to the first, with momentum likely extending into the first half of next year. Moreover, Lin revealed that alongside sustained procurement growth from existing clients, new enterprise and CSP customers have been acquired, including those adopting L10 and L11 products.

Initially, a transition gap between old and new products was expected in Q3. However, as some customers continue purchasing GB300 units while others adopt the next-generation Vera Rubin platform, the company maintains an optimistic outlook for Q3.

Regarding rising memory prices, Lin believes AI servers represent a rigid demand category, meaning customers will continue procurement despite price increases.

Lin further explained that the AI server market is currently an oligopoly with supply unable to meet demand. With new clients and products rolling out, this will serve as a key growth driver. Wistron plans to establish diverse collaboration models with various clients and expressed confidence in maintaining healthy profit margins even as next-generation platforms command higher unit prices.

For networking products, Lin projected over 10x year-on-year growth. The company has already penetrated North America’s largest networking vendor, supplying through them to CSPs. Both gross and operating margins are currently strong. Wistron will continue developing new products and disclosed ongoing discussions with new clients, expecting further shipment increases next year.

On the PC business, Lin noted that anticipation of rising memory prices led to front-loaded orders in the first half, resulting in better-than-expected performance. However, due to this pull-forward effect and rising end-product prices, PC shipments are expected to decline by 15% in the second half. Still, he emphasized that higher pricing could prevent revenue from declining proportionally.