Compal Expands AI Server Production in Vietnam, Taiwan, and the US

Compal Electronics, a major supplier of laptops for HP and Dell, is significantly expanding its production capabilities for AI servers in Vietnam, Taiwan, and the United States. This strategic shift comes as the global demand for AI infrastructure surges, prompting the company to pivot from traditional PC manufacturing to focus on AI server production.

The company has increased its capital expenditure for 2026 to NT$18 billion (approximately US$558 million), a substantial rise from NT$8 billion (around US$248 million) in 2025. This investment will facilitate the construction and expansion of AI server manufacturing facilities across the three key markets, with a new factory in Taoyuan, Taiwan expected to begin production in the fourth quarter of 2026.

“Vietnam will serve as a strategic center for our level 6 manufacturing, meaning component production, before products are sent to Taiwan and Texas for final assembly of AI servers.”Ray Chen, President of Compal Electronics

Compal's second factory in Vietnam is also expected to commence operations soon, where it will focus on producing components that will be shipped to Taiwan and Texas for final assembly. Compal's President, Ray Chen, stated at the opening ceremony that Vietnam will serve as a strategic center for their level 6 manufacturing, meaning component production, before products are sent to Taiwan and Texas for final assembly of AI servers.

This expansion is part of Compal's broader strategy to capture a growing share of the AI server market, which is projected to contribute approximately 10% to the company's total revenue this year, up from about 2% in 2025. Analysts expect this figure could rise to between 30% and 40% in the next year as the company secures additional contracts with large-scale cloud service providers and enterprises.

Currently, Compal has begun shipping AI servers to clients categorized as “neocloud,” which refers to data centers specializing in providing AI computing capabilities. Notable clients include GMI Cloud from the U.S. and Dell.

“The supply of DRAM may remain constrained next year, putting significant pressure on the personal computing industry.”Ray Chen, President of Compal Electronics

However, Compal faces challenges related to a global shortage of chips and components, particularly DRAM and CPUs. Ray Chen noted that the supply of DRAM may remain constrained next year, putting significant pressure on the personal computing industry. Alan Chang, Compal's Vice President and General Manager of AI Servers, echoed this concern, stating during a discussion with reporters that CPU supply is also limited, affecting server production.

The company aims to leverage its established supply chain relationships to navigate these challenges effectively. Compal's extensive production network across Taiwan, Vietnam, and the U.S. allows it to allocate manufacturing processes strategically, enhancing its ability to meet customer demand in various markets.