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The Rising of Chinese Servers, Chance or Threat to Taiwan?

By Vincent Wang
Published: Sep 25,2014

TAIPEI, Taiwan — As one of the goals of China's 12th Five-Year Plan (2011-2015) is to advance the local content rate of NB components to 30 percent in 2015. At the same time, Chinese brands are emerging in the server market with more investment in the data center in China, which drives China to rank No. 3 in the worldwide server market. The IBM-Lenovo server agreement has become growth drivers for both Chinese and Taiwanese server supply chain.

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The Chinese power is still emerging in IT industry, as one of the goals of China's 12th Five-Year Plan (2011-2015) is to advance the local content rate of NB components to 30 percent in 2015. Tech giants such as Microsoft and Intel also teamed up with Chinese components supply chain to nurture the white box tablets in China.

Yang Zheng-yu, Analyst at Market Intelligence & Consulting Institute (MIC), pointed out that the current local content rate of Chinese NB is about 5 percent, “It seems a hard job to jump to 30 percent from 5 percent, the new Lenovo-Compal Future Center (Lcfuturecenter) is definitely a growth driver of local content rate of NB components in China.”

The LCfuturecenter is an industry-leading PC manufacturing facility, a joint venture between Lenovo Group and Compal Electronics, with 51 percent and 49 percent shares respectively.

Lenovo to acquire IBM's x86-based server business that a driving force not only for Chinese server supply chain, but also that of in Taiwan.

“Lenovo and Inspur have squeezed into the top 5 global server providers, Taiwanese firms like Quanta and Wistron leaped at the chance to get orders from Baidu and Alibaba,” said Lin Xiao-fang, Analyst at MIC.

The rising of Chinese servers, chance or threat to Taiwan? It seems a win-win situation for Taiwan server providers to cooperate with Chinese server providers.

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