Thailand's Delta Sees AI Boom Boosting Sales for Coming Years
The maker of components for data centers and electric vehicles is boosting investment to fuel its expansion, Cheng said in an interview. The company also says it plans to raise its sales forecast for the second half of this year, without disclosing what its estimate is.
AI-related products, such as networking and data-center power equipment, will account for half of Delta Thailand's sales by the end of the year, up from 42% in the latest quarter, the company forecasts. It is among Southeast Asian suppliers benefiting as customers including Nvidia Corp. expand in the region and beyond to tap rising demand for services such as generative artificial intelligence.
'All the applications involving AI will continue to grow,' Cheng said. 'This business is not slowing down.'
Among challenges is a US tariff of 19% on Thai exports, though Cheng said he isn't too worried as the company can 'pretty much pass on all the tariffs to customers.' The US accounts for as much as 35% of Delta Thailand's sales, he said.
Second-half performance will benefit from a refund of some of the tariffs Delta Thailand had to pay upfront to customers earlier in the year, the company says. US President Donald Trump has recently set Thailand's tariff rate at 19% after previously threatening 36%.
With Nvidia and its peers releasing new AI hardware at a rapid clip, Delta Thailand and its competitors are under pressure to deliver everything from power supply to thermal heating solutions to fit the advanced computing equipment. Data center capacity in the Asia-Pacific region will more than double by 2030, requiring investment of more than $800 billion, according to Moody's Corp.
'Momentum is strong,' Cheng said. 'Data-center segment is the one that's propping up our both top lines and bottom lines.'
Shares of the company have more than doubled from an April low, bringing its market capitalization to about $60 billion and putting it far ahead of local peers. Analysts cite it as one of just a few Thai companies well-positioned to benefit from the data center boom. In November, the local stock exchange introduced trading curbs on the company's shares after its surging price triggered a surveillance mechanism.
'I continue to say that I don't like the stock price to be too high,' Cheng said. 'If it's so high I don't know how well it will be sustained and somebody is going to get hurt.'
The company is expanding its research and development operations in Thailand by hiring more designers and entering new areas such as thermal simulation engineering. It has recruited more than 100 engineers this year, bringing the total to about 400 in the country. Overall, it has about 20,000 employees in Thailand, its biggest global base.
Its two new production facilities in the Wellgrow industrial estate near Bangkok will come online in the fourth quarter. The additional capacity will help it meet demand for power thermal solutions and other components.
'In the next few years, AI and digitization being smarter and faster will support our growth,' Cheng said. 'We just want to maintain this double-digit growth' and 'discipline in our profit margin management.'
More stories like this are available on bloomberg.com
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