Nvidia Taps Taiwanese Supplier Nan Juen for Key Role in AI Server Production

Nvidia Corp NVDA collaborated with Taiwanese rail kit supplier Nan Juen International Co for the chip designer’s GB200 artificial intelligence (AI) servers. Rail kits refer to rails for mounting servers and other IT equipment.

Nan Juen, a supplier of rail kits for servers and non-server applications, successfully entered Nvidia’s supply chain with the move.

Nan Juen will likely complete volume production preparations in the third quarter of 2024, with initial shipments likely to begin at the end of 2024 or early 2025, the Taipei Times cited from an investor conference in Taipei.

The rail kit business will likely play a more significant role in Nan Juen’s 2025 revenue as the firm ramps up production to meet Nvidia’s demands.

The server rail kit market has the potential to grow by $24.07 million to $99.87 million at a CAGR of 5.67% between 2023 and 2028, driven by the increased demand for cloud-based storage, rising mobile data traffic, and the upgradation and expansion of data centers by hyper scalers, as per Technavio. 

KeyBanc analyst John Vinh expects Nvidia’s GB200 and Blackwell to drive over $200 billion in Data Center revenue in 2025.

The upbeat quarterly prints of server AI company Super Micro Computer, Inc SMCI and Apple Inc AAPL supplier Hon Hai Precision Industry Co bear testimony to the strong demand for AI servers.

Since 2002, Nan Juen has been collaborating with Super Micro Computer for mass production. In 2019 and 2022, the company entered the data center supply chains of two major U.S. cloud service providers.

With the Nvidia deal, Nan Juen will join King Slide Works Co as the second rail kit supplier for GB200 servers.

Price Action: At the last check on Thursday, NVDA shares were trading lower by 1.12% to $127.14.

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