Key facts
- Compal Electronics is expanding AI server production in Taiwan, Vietnam, and the U.S.
- The company expects explosive growth in its AI server business in 2026.
- AI servers are projected to constitute over 80% of Compal's server revenue in 2026.
- A $500 million U.S. expansion plan is underway, targeting completion by Q2 2026.
- Compal's revenue fell 17% in 2025 to approximately $23.7 billion.
Compal Electronics, a significant contract manufacturer for HP and Dell notebooks, is strategically expanding its production capabilities in Taiwan, Vietnam, and the United States to capitalize on the surging global demand for artificial intelligence infrastructure and servers. This pivot aims to offset a decline in its traditional PC business and drive future revenue growth.
Chairman Barry Lam has declared 2026 as a year of "explosive growth" for Compal, projecting that AI servers will become the primary revenue engine, accounting for over 80% of the company's total server business. This optimism follows a challenging 2025, where revenue fell approximately 17% year-on-year to around NT$750 billion (approximately $23.7 billion). Lam attributed this decline to the post-pandemic slump in laptop demand and a deliberate strategy to phase out low-margin contract manufacturing.
To support the anticipated surge in AI server demand, Compal is undertaking significant capacity expansions. This includes a $500 million investment in its U.S. facilities, slated for completion by the second quarter of 2026, which will focus on producing high-end L10 and L11 AI server products. Concurrently, production lines are being rapidly expanded in Vietnam, and SMT and assembly lines are being increased in Taiwan. This multi-regional approach is designed to meet customer requirements for geographic diversification and ensure production resilience.
Beyond hardware production, Compal is also focusing on AI PCs, expecting them to represent 50% to 60% of its total PC revenue in 2026. The company is further diversifying its AI portfolio with advancements in edge AI, industrial PCs, and other AI terminal products. Compal's transformation also involves rejuvenating its management team, with the average leadership age dropping to over forty, and integrating AI across all facets of its operations, from internal management to manufacturing automation.