Taipei: Taiwan is expected to retain higher-value server activities such as GPU board production and next-generation product development even as more manufacturing capacity moves overseas, a Taiwanese industry analyst said Tuesday. Lin Bo-chi, deputy director general of the Institute for Information Industry (III)'s Market Intelligence and Consulting Institute (MIC), emphasized the strategic retention of crucial server operations within Taiwan.

According to Focus Taiwan, Lin highlighted that Taiwanese server makers will continue expanding production abroad to meet customers' demand for U.S.-based manufacturing. "But this does not mean the companies are leaving Taiwan," Lin reassured reporters during the MIC Forum in Taipei. The transition reflects a strategic response to global market demands while maintaining a stronghold on high-value operations domestically.

Although the share of Taiwanese manufacturers' output produced in Taiwan may decline, the country's server production value is expected to grow, supported by global market expansion. MIC forecasts a 12.4 percent growth in global server shipments by 2027, propelled by ongoing investments in AI infrastructure by cloud service providers and AI model developers. AI server shipments are projected to rise 17.8 percent to 5.4 million units by the same year.

Lin noted that GPU board production, in particular, is likely to remain in Taiwan due to the presence of TSMC and a robust semiconductor supply chain. The design and prototyping of advanced, next-generation server products are also anticipated to be conducted initially in Taiwan, capitalizing on local expertise and resources.

Conversely, later-stage production tasks, such as L10 server assembly and L11 rack integration, are more apt to occur overseas. Lin questioned the practicality of assembling a rack in Taiwan for overseas shipment, emphasizing the lack of domestic demand for computing capacity.

Meanwhile, MIC's presentation revealed that Taiwanese server manufacturers are expanding production in the U.S., Mexico, and Southeast Asia to align with customers' local manufacturing preferences. Lin suggested that this shift could extend beyond later-stage assembly, with a potential increase in L6 board-level production moving overseas as manufacturing capabilities and cost efficiencies improve in countries like Vietnam, Thailand, and Mexico.

Lin clarified that this transition will be gradual, contingent on the development of overseas production capabilities and supporting supply chains. Taiwan is poised to retain advanced design, prototyping, and other high-value activities that benefit from its established semiconductor ecosystem, ensuring its continued relevance in the global server market.