Taiwan's Delta Electronics warns costs rising as AI data centre demand surges

• First-quarter revenue reached T$159.35 billion ($5.02 billion), up 34% year-over-year, with gross profit jumping 56% to $1.86 billion driven by AI datacenter build-out
• The company plans capital expenditure exceeding T$46.1 billion ($1.46 billion) in 2025 as it expands capacity across multiple countries amid tight supply conditions
• Delta is Taiwan's second most valuable company with $178.46 billion market cap, trailing only TSMC, and serves major AI players including Nvidia, Google, and Meta

Delta Electronics Warns of Rising Costs Amid Surging AI Data Center Demand

Taiwan's Delta Electronics, a major supplier of power and cooling solutions for AI data centers, cautioned that costs are expected to increase in coming quarters due to rising oil prices, material shortages, and AI-driven inflation.

Key Financial Performance:

• Q1 2025 revenue reached T$159.35 billion ($5.02 billion), up 34% year-over-year
• Gross profit surged 56% to T$59 billion ($1.86 billion)
• 2025 capital expenditure totaled T$46.1 billion ($1.46 billion), with higher spending planned for the current year
• Market capitalization stands at $178.46 billion, making it Taiwan's second most valuable company after TSMC

Operational Updates:

The company reports tight capacity constraints and is actively expanding operations across China, Thailand, the United States, and Taiwan to meet surging demand. Delta's customer base includes major players such as Nvidia, Google, and Meta Platforms, positioning it at the heart of the AI infrastructure boom.

Market Implications:

The warning signals broader industry pressures as AI data center buildout accelerates globally. Rising input costs and material shortages could compress margins across the sector, despite robust revenue growth. The company's aggressive expansion plans underscore confidence in sustained AI demand, though inflationary pressures may impact profitability.

Delta's strong Q1 performance, with gross profit growth outpacing revenue, demonstrates current pricing power. However, the cost warnings suggest this advantage may diminish, potentially affecting the broader supply chain serving AI infrastructure development. Investors should monitor whether competitors face similar margin pressures and how effectively Delta can pass costs to customers.