Aaron Lee, Taipei; Joseph Tsai, DIGITIMES [Monday 31 July 2017]

Taiwan Semiconductor Manufacturing Company (TSMC) has reportedly shifted its server procurement orders for the second half of 2017 from the original supplier Lenovo to Supermicro Computersources from the upstream supply chain.

TSMC will continue to outsource its niche server orders to Hewlett-Packard Enterprise (HPE) and Dell. These orders will offer limited volumes, but better profits.

Lenovo started supplying servers to TSMC in the second half of 2016 and became the largest server brand vendor in Taiwan in the third quarter of 2016 with a market share of 28%.

However, Lenovo only saw small profits from the orders since the company had obtained them by offering low quotes.

Currently, Taiwan’s server market has a shipment scale of 80,000-100,000 units per year and TSMC’s annual demand is about 4,000-7,000 units, equivalent to 1,000-1,750 units per quarter. With TSMC shifting its orders away from Lenovo, it could seriously undermine Lenovo’s market share in the second half of 2017.

In addition to Supermicro, Quanta Computer also has become a server supplier for TSMC, but its order volumes are not yet confirmed.

The loss of TSMC’s orders are also expected to afffect Lenovo’s upstream server suppliers. Lenovo’s server suppliers are Inventec, Wistron and Compal Electronics, and Compal was responsible for the TSMC orders, the sources said.