At a glance. Record margins, half of them accounting, and one exchange that reads very differently in hindsight: asked whether power racks would go above 400 V, Delta said 800 V was a plausible future custom standard and that it had no technical problem building one. Ten months later NVIDIA made 800 VDC the reference architecture and put Delta on its partner list.
What changed this quarter
Margins hit records, but only half on merit. Gross margin of 34.9% and operating margin of 14.6% were both all-time highs. Management attributed roughly half the gain to genuine mix improvement and the other half to reversals of previously conservative inventory write-downs, worth more than 2 percentage points.
Liquid cooling was named as the 2025 growth engine. Data-center business was about 8% of company revenue and expected to reach double digits in 2025, with liquid cooling the single largest driver.
Storage entered the conversation properly. Management described BBUs as a load buffer against violent GPU swings, with high customer interest, and supercapacitors as complementary for higher-frequency noise — faster to respond than lithium cells and longer-lived. Supercapacitor supply was the constraint, with volume production about a year away.
The numbers
| Q3 2024 | Value | Change |
|---|---|---|
| Revenue | NT$112.2bn (~US$3.6bn) | +4% YoY, +8% QoQ |
| Gross margin | 34.9% | record |
| Operating margin | 14.6% | record |
| Net income | NT$12.3bn (~US$390m) | +32% YoY |
| EPS | NT$4.75 (~US$0.15) | — |
Nine months: revenue NT$306.9bn (+2%), gross margin 33.0%, operating margin 12.0%, net income NT$28.1bn (+15%), EPS NT$10.80.
Operating expense rose 15% on inflation, wages, and the post-pandemic return of travel. Inventory climbed back above NT$80bn by quarter end, so Q4 was guided to swing from write-down reversals to fresh charges. A weaker US dollar was flagged as a negative.
NVIDIA 800V read-through
The exchange worth quoting, from December 2024:
Will power racks adopt voltages above 400 V? Not necessarily. 380/400 V is the industrial standard today. To improve energy efficiency, data centers may move toward higher voltages such as 800 V as a customised standard, to reduce current losses and cable cost — but that needs time to develop. For Delta there is no technical problem; it depends on market trends.
That is what a named ecosystem partner sounds like before the standard exists. What was actually shipping and planned:
- Mainstream PSU at 5.5 kW, with 8 kW on the roadmap for the next generation.
- Architecture centralising from PSU to power shelf to power rack, with redundancy rising — GB200 power shelves moving from four to six units toward eight.
- BBU sold bundled with the power system; cells bought in, packing partly in-house, partly outsourced to Taiwanese partners.
- Supercapacitors still conceptual, with one Japanese supplier holding very small capacity.
The BBU-plus-supercapacitor split maps directly onto NVIDIA's later storage-by-timescale table: capacitors below 100 ms, batteries beyond.
Segments that moved
Nine-month figures show a company pulling in two directions.
Power electronics was 53% of sales, revenue up 7% and profit up 26%. AI server power grew over 25%; passives grew close to 30% on server and automotive demand.
Infrastructure was 23%, revenue down 4% but profit up 21% — the mix effect of data-center work replacing weak telecom power.
Automation was 13%, revenue down 7% and profit down 42%, with no clear recovery.
Mobility was 11%, revenue up 1% but profit down 21%, with some customers halting flagship EV models. Management said near-term contribution would be limited and possibly loss-making.
Guidance
- Q4 2024 revenue better than seasonal, with year-on-year growth accelerating against a low base; gross margin down from the Q3 peak as passives enter their soft season and reversals stop.
- 2025 revenue growth better than 2024, led by infrastructure and specifically liquid cooling. Expense growth below revenue growth, though the 18–19% expense ratio of earlier years is not returning soon.
- Margin volatility expected to be lower than 2024, since the businesses that fell this year have a low base and limited further downside.
Management Q&A
Q: How does the Infrastructure segment relate to AI, and how does it work with Power Electronics?
A: Infrastructure supplies data-centre infrastructure: power systems such as UPS and cabinets, plus cooling — liquid cooling is the main future growth driver there, with some air cooling. Power Electronics supplies the PSU inside the server. The two are separate but closely related, and on some jobs Delta acts as general contractor for a full solution.
Q: Will next year's gross-margin drivers be the same as this year's?
A: Data-centre products that carry higher margins should keep growing, but from a high base the rate may slow. Businesses that were weak this year — automation, networking — already sit on a low base with limited further downside, so mix improvement should be milder than this year's and margin moves more stable.
Q: Where does Infrastructure gross margin sit versus the company average?
A: Roughly in line with the company average, perhaps a little lower. Energy infrastructure is the weaker-margin piece inside the segment; ICT infrastructure is around the company average in the low-30s.
Q: How much did Q2 and Q3 2024 inventory-provision reversals contribute to gross margin?
A: Versus the write-downs taken a year earlier, the swing added more than 2 percentage points of gross margin. Gross margin was up about 4–5 points in total, so the other half of the improvement was mix.
Q: Will Q4 inventory charges be as large as last year's?
A: They should not be as large as last year's, but the line is expected to swing from a positive reversal to a negative charge. EV inventory is under the most pressure, including customers that have stopped assembling because finished vehicles will not sell.
Q: What is the progress on 8kW power supplies?
A: The current generation's mainstream rating is 5.5kW. 8kW is planned for the next generation and is already on the R&D roadmap.
Q: What roles do BBU and supercapacitors play in AI servers?
A: In AI servers the BBU is mainly a power buffer for sharp load swings, and CSP interest is high. Supercapacitors handle higher-frequency noise, respond faster than lithium cells and last much longer. The two are complementary, not substitutes.
Q: How is the BBU supply chain organized?
A: Cells are mostly purchased; packing is partly in-house and partly outsourced to Taiwanese partners. The prevailing model is to sell BBU bundled with the power system rather than as a standalone.
Q: What is the trend in GB200 Power Shelf and BBU configuration?
A: The industry is still exploring the right mix; there is no settled answer. Power Shelf counts have been moving from six toward eight for 100% redundancy, but stability, cost, space and supply chain all bear on the final design.
Q: What is the supply situation for supercapacitors?
A: The product is still at a concept stage, with very small capacity at the main supplier, a Japanese company. Large-scale production is expected to take about another year, so supply could be a bottleneck in the near term.
Q: How does the Power Rack develop, and what is its value?
A: As GPU counts per cabinet rise, space inside the IT rack becomes more valuable, so moving power into a separate Power Rack is a trend. That increases the product value Delta can sell.
Q: Will Power Racks run above 400V?
A: Not necessarily. 380/400V three-phase is the industrial standard today. Data centres are large enough to set custom standards, and raising voltage toward 800V would cut current, losses and cable cost, but that will take time. For Delta the technology is not the constraint; the market's direction is.
Disclaimer
English notes on Delta Electronics' investor conference of 12 December 2024, covering Q3 2024. Figures are as presented by management and have not been independently verified. USD equivalents are approximate at about NT$31.5 to the dollar. For reference only; not investment advice.