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Supermicro Adding 3 New Manufacturing Facilities in Silicon Valley and Globally to Support the Growth of AI and Enterprise Rack Scale Liquid-Cooled Solutions

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Supermicro (NASDAQ: SMCI) is expanding its manufacturing footprint by adding three new facilities in Silicon Valley and globally to meet the growing demand for AI and enterprise rack scale liquid-cooled solutions.

The expansion aims to double the current production capacity of liquid-cooled AI SuperClusters, which currently stands at 1,000 units per month.

These new facilities will focus on delivering comprehensive liquid-cooled solutions, which offer up to 40% lower operational expenses and reduced environmental impact compared to traditional air-cooled data centers.

Supermicro's advanced liquid-cooled technology enhances AI compute performance per watt, and the company expects liquid-cooled data centers to grow from less than 1% to up to 30% of all data center installations in the next two years.

The facilities will also support high-performance NVIDIA GPU-based servers and other cutting-edge technologies optimized for liquid cooling.

Positive
  • Supermicro is doubling its liquid-cooled AI SuperClusters production capacity.
  • New facilities will reduce operational expenses by up to 40%.
  • Expansion aligns with increasing demand for AI and enterprise rack scale liquid-cooled solutions.
  • Liquid-cooled data centers expected to grow from less than 1% to up to 30% of installations in two years.
  • Enhanced AI compute performance per watt with liquid-cooled technology.
  • Facilities will support high-performance NVIDIA GPU-based servers.
Negative
  • Initial investment for new facilities is likely to be substantial.
  • Market adoption of liquid-cooled data centers may not meet expectations.

Supermicro's expansion into liquid-cooled data centers marks a significant shift in the tech landscape. Liquid-cooling technology, despite being less common, offers substantial advantages in terms of energy efficiency and cost savings. Traditional air-cooled data centers are becoming less viable due to the rising energy demands of AI workloads. Liquid cooling can significantly reduce operational expenses, potentially saving up to 40% on electricity costs, making it a more sustainable and economically attractive solution.

One key aspect to note is the adaptability of Supermicro's servers. For instance, the NVIDIA-based 1U ARS-111GL-NHR-LCC supports the Grace Hopper Superchip, indicating a focus on high-performance AI processing capabilities. This positions Supermicro favorably to meet the growing demand for AI computing power, especially as AI applications become more complex and resource-intensive.

Moreover, the company's comprehensive approach—offering end-to-end liquid-cooling solutions from cold plates to cooling towers—ensures that clients receive a cohesive and optimized setup. This reduces the risk of compatibility issues and enhances overall system performance.

For retail investors, this expansion could signify Supermicro's commitment to innovation and sustainability, potentially driving long-term growth. However, the success of this venture depends on widespread adoption of liquid-cooling technology and maintaining quality and reliability in deployments.

Supermicro’s strategic investment in new manufacturing facilities to support liquid-cooled AI solutions could have considerable financial implications. By doubling their global liquid-cooled rack capacity, Supermicro aims to address the increasing demand for energy-efficient data centers, a field projected to shift from less than 1% to up to 30% of all installations within the next two years. This ambitious growth target is notable and indicates significant market opportunities.

Financially, the expansion could lead to higher top-line growth driven by increased sales of liquid-cooled solutions. Additionally, the operational cost savings provided by liquid cooling—up to 40% lower electricity use—could be a strong selling point, potentially improving market share and margins.

However, it's important to consider the capital expenditure involved in setting up these facilities and the timeline for achieving a return on investment. While the potential for reduced operational costs and environmental benefits is promising, the actual impact on Supermicro’s financials will depend on execution and market acceptance.

Investors should monitor key financial metrics such as revenue growth, margin improvement and capital expenditure efficiency in upcoming quarters to gauge the success of these initiatives.

The liquid-cooling market for data centers is relatively nascent but poised for rapid growth due to its advantages in energy efficiency and performance. Currently, liquid cooling represents a small fraction of the market, but Supermicro's prediction that it could grow to 15%-30% indicates significant potential.

Supermicro's initiative to double its manufacturing capacity could place it at the forefront of this emerging trend. The company's ability to provide comprehensive, plug-and-play liquid-cooled solutions addresses a key market barrier: the complexity and inexperience of data center operators with liquid-based systems. Supermicro's integrated approach could ease the transition for customers, driving adoption rates.

From a market perspective, this expansion aligns well with the broader industry shift towards sustainability and efficiency. As data center operators face increasing pressure to reduce their environmental impact, solutions like liquid cooling that offer lower electricity consumption and operational expenses will likely see higher demand.

Retail investors should note the potential for Supermicro to capture significant market share in this growing segment. The company’s proactive stance in expanding capacity and offering turnkey solutions could position it as a leader in liquid-cooled data center technology, offering a competitive advantage in a rapidly evolving market.

Expanded Manufacturing Footprint is Targeted to Bring Global Liquid-Cooled Rack Capacity to More than Double Today's 1,000 AI SuperClusters Shipped Per Month

SAN JOSE, Calif., June 17, 2024 /PRNewswire/ -- Supermicro, Inc. (NASDAQ: SMCI), a Total IT Solution Provider for AI, Cloud, Storage, and 5G/Edge, continues to expand in Silicon Valley with new campuses as the demand for liquid-cooled data center increases. The new facilities will be part of the new liquid-cooled ecosystem, reducing the time needed to deliver to customers worldwide. These new facilities will focus on delivering entire plug-and-play liquid-cooled solutions, from systems to racks to water towers. With AI factories becoming more prevalent, liquid-cooled data centers are critical to meet these increasing customer demands for AI-focused workloads. Liquid-cooled data centers increase the amount of AI compute performance per watt, resulting in more performance per data center. In addition, electricity consumption and environmental impact are reduced, and operational expenses can be up to 40% lower compared to traditional, air-cooled data centers.

"Supermicro has the highest performing generative deep learning and inferencing AI platform and clusters which benefit from liquid-cooled technologies," said Charles Liang, president and CEO of Supermicro. "Many data center owners are looking for electricity saving Direct Liquid-Cooled solutions. Supermicro is developing building block liquid-cooled solutions for AI factories and the HPC market. We anticipate that liquid-cooled data centers will grow from historically less than 1% to an expected 15% and up to 30% of all data center installations in the next two years. This expansion positions us to capture the majority share of that growth. New data centers will run more efficiently, reducing their carbon footprint, and can be virtually free, compared to air-cooled data centers, with significant operational savings realized through lower electricity use over time."

To learn more about Supermicro's Building Block liquid cooling solutions, click here 

"We are thrilled that Supermicro is expanding in San Jose and leading the charge to reduce the impact of data centers," said Matt Mahan, Mayor of San Jose, CA. "Supermicro represents the best of Silicon Valley as a company that continues to push the boundaries of both technology and sustainability."

Supermicro, as a total solution provider, supplies all the components needed for an efficient and optimized liquid-cooled solution. From the Supermicro optimized cold plates to the coolant distribution manifolds (CDMs) to the redundant coolant distribution units (CDUs) and even the external cooling tower, the entire end-to-end solution is designed and tested by Supermicro engineers, which results in a higher quality solution, enabling organizations to get more productive sooner.

Many Supermicro servers are explicitly designed for high-performance NVIDIA GPUs for AI processing, such as the very high-density 4U-8GPU systems, the Intel CPU-based SYS-421GE-TNHR2-LCC, or the AMD CPU-based AS -4125GS-TNHR2-LCC. In addition, many Supermicro servers, such as the popular 8U-8GPU systems, are liquid-cooled ready, as well as NVIDIA-based 1U ARS-111GL-NHR-LCC, which includes the Grace Hopper Superchip. Liquid-cooled servers include the 8U-20-node SuperBlade®, which provides the highest CPU and GPU computing density available today. The 2U-4 node Supermicro BigTwin® and the 4U-8 node FatTwin® multi-node servers are optimized for liquid cooling and are in high volume production today.

Supermicro continues to work closely with data center operators to match the right server technology to the demanding workloads, which are unique to each organization and cloud service provider. Many of these application-optimized servers are designed to be liquid-cooled, which reduces the overall operational cost of the data center.

Many customers have limited experience handling liquid inside data centers, requiring vendors to perform the installation and acceptance testing along with future maintenance and warranty service. On-site support is critical, and Supermicro's service organization is highly trained in liquid-cooling deployments.

About Super Micro Computer, Inc.

Supermicro (NASDAQ: SMCI) is a global leader in Application-Optimized Total IT Solutions. Founded and operating in San Jose, California, Supermicro is committed to delivering first-to-market innovation for Enterprise, Cloud, AI, and 5G Telco/Edge IT Infrastructure. We are a Total IT Solutions manufacturer with server, AI, storage, IoT, switch systems, software, and support services. Supermicro's motherboard, power, and chassis design expertise further enable our development and production, enabling next-generation innovation from cloud to edge for our global customers. Our products are designed and manufactured in-house (in the US, Taiwan, and the Netherlands), leveraging global operations for scale and efficiency and optimized to improve TCO and reduce environmental impact (Green Computing). The award-winning portfolio of Server Building Block Solutions® allows customers to optimize for their exact workload and application by selecting from a broad family of systems built from our flexible and reusable building blocks that support a comprehensive set of form factors, processors, memory, GPUs, storage, networking, power, and cooling solutions (air-conditioned, free air cooling or liquid cooling).

Supermicro, Server Building Block Solutions, and We Keep IT Green are trademarks and/or registered trademarks of Super Micro Computer, Inc.

All other brands, names, and trademarks are the property of their respective owners.

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SOURCE Super Micro Computer, Inc.

FAQ

What is the impact of Supermicro's new manufacturing facilities?

The new facilities aim to double the production capacity of liquid-cooled AI SuperClusters and reduce operational expenses by up to 40%.

When was the Supermicro expansion announced?

The expansion was announced on June 17, 2024.

What is the expected growth of liquid-cooled data centers?

Supermicro expects liquid-cooled data centers to grow from less than 1% to up to 30% of all installations in the next two years.

How will the new facilities affect Supermicro's product offerings?

The new facilities will support high-performance NVIDIA GPU-based servers and other liquid-cooled solutions, enhancing AI compute performance per watt.

What are the potential benefits of Supermicro's liquid-cooled solutions?

Benefits include up to 40% lower operational expenses, reduced environmental impact, and enhanced AI compute performance per watt.

Super Micro Computer, Inc.

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