When it comes to enterprise computing, high-performance servers, storage systems, and network solutions have never been more critical as they drive the backbone of modern-day businesses.
Super Micro Computer is a global leader specializing in high-performance, high-efficiency server technology, and green computing. They design, develop, manufacture, and sell server solutions based on modular and open architecture. Their product portfolio includes servers, GPU systems, workstations, and many more computing components and solutions, which cater to a range of requirements across industries.
With clients on a broad spectrum, from cloud computing giants to emerging small and medium businesses, Supermicro’s solutions are well-appreciated in industries like e-commerce, enterprise IT, big data, high-performance computing, and now, artificial intelligence. Leveraging its comprehensive end-to-end product line to take advantage of the digital transformation occurring across industries, Supermicro is keenly focused on capitalizing on the growing demand for cloud-based solutions and AI-driven applications.
In particular, the company has made significant strides in artificial intelligence with its AI and machine learning solutions that are designed to deliver unparalleled performance and efficiency for AI workloads. These solutions provide the power necessary to process large amounts of data, manage and coordinate multiple tasks, and adapt to evolving needs. They are also integrated with leading open-source AI software frameworks, making it easier for customers to build applications that push the boundaries of what’s possible with AI.
In addition, Supermicro continues to drive technological advancements that offer the most optimized solutions for IT, data center, and high-performance-computing deployments, while simultaneously pursuing growth opportunities in new markets such as 5G and digital transformation.
Super Micro Computer, commonly known as Supermicro, was founded in 1993 by engineer Charles Liang, along with Sarah Liu. The company began in San Jose, California, with the vision of developing server solutions using an emphasis on “modular” system architecture, where components of a system could be upgraded independently of the whole.
Starting small, Supermicro initially focused on developing high-performance server boards. Liang wanted to develop application-optimized server solutions that matched what the customer needed, rather than selling a one-size-fits-all server.
The company found significant success with its early products. By 1996, they were listed among the fastest-growing privately held companies. That same year, Supermicro expanded its product portfolio to include not only server boards but also chassis and server systems. In the 2000s, the company pushed into environmentally friendly computing with the Green SuperServer and SuperBlade solutions, emphasizing energy efficiency.
Supermicro went public in 2007, raising $64 million in an initial public offering that funded further growth and expansion of its product line. Post-IPO, Supermicro continued to launch innovative products, including the Twin server solutions which brought unprecedented power efficiency and density benefits.
When cloud computing emerged as a significant trend, Supermicro was at the forefront, offering products optimized for hyper-scale data centers. And as the demand for AI and machine learning capabilities began to increase, Supermicro responded with powerful new server designs capable of handling these workloads.
Founder Charles Liang still heads up Supermicro as president, chief executive officer, and chairman of the board since the company’s inception in 1993. Liang has been developing server system architectures and technologies for decades with Supermicro and previous roles at Micro Center Computer Inc, Micro Center Computer Inc, and Suntek Information International Group.
Under Liang’s leadership, Supermicro has grown into a global leader in high-performance, high-efficiency server technology, and green computing. His unwavering dedication to developing modular, application-optimized server solutions tailored to the customer’s needs has allowed Supermicro to maintain its position at the forefront of the industry, continuously innovating and setting trends in the server technology space.
Supermicro is at the cutting edge of accelerated compute platforms, delivering application-optimized server solutions that are as diverse as they are technologically advanced. With a vast product portfolio, the company caters to markets that span enterprise data centers, cloud computing, artificial intelligence, 5G, and edge computing.
Supermicro’s offerings broadly comprise server and storage systems, server subsystems and accessories, along with server software management solutions and support. Key product lines include:
• SuperBlade and MicroBlade system families designed to share common computing resources, thereby saving space and power over standard rackmount servers;
• SuperStorage systems that provide high-density storage while leveraging an efficient use of power to achieve performance-per-watt savings;
• Twin family of multi-node server systems designed for density, performance, and power efficiency;
• Ultra Server systems for demanding enterprise workloads;
• GPU or Accelerated systems for rapidly growing AI markets;
• Data Center Optimized server systems that deliver increased scalability and performance-per-watt with an improved thermal architecture;
• Embedded (5G/IoT/Edge) systems optimized for evolving networks and intelligent management of connected devices; and
• MicroCloud server systems that deliver node density in environments with space and power constraints.
A large array of modular server subsystems such as server boards, chassis, power supplies, and other accessories are also designed to work together to improve performance and are ultimately integrated into a customer’s complete server and storage systems.
In addition to their hardware offerings, Supermicro supplements their platforms with open industry-standard remote system management solutions such as Supermicro Server Manager, Power Management software, Update Manager, Composer, and SuperDoctor. These software solutions have been designed to help manage large-scale data center environments.
Finally, Supermicro’s Global Services arm provides customers with server and storage system integration, configuration, and software upgrades. The company also offers on-site product support for its server and storage systems and customer support services that include competitive warranties and ongoing maintenance.
The versatility of Supermicro’s subsystems and accessories allows users to create bespoke server and storage systems, providing a unique competitive advantage. The systems find usage across a diverse range of sectors, from cloud service providers managing massive data workloads to AI researchers running complex computations and start-ups bringing innovative AI-based products to market.
Supermicro’s objective is to be the world’s leading provider of solutions using accelerated computing platforms that are application-optimized for high-performance server, storage, and networking. Consequently, the company’s strategy is focused on the continuous development and innovation of its Total IT Solutions with better price-performance and architectural advantages compared with its prior generation of solutions and with those offered by competitors, ultimately providing long-term growth opportunities.
Core to delivering this strategy is Supermicro’s strong internal research and development and internal manufacturing capability. With over 2,000 employees in its research and development organization, these resources enable the company to deliver product innovation featuring advanced functionality and capabilities required by customers. Also, substantially all of Supermicro’s servers are tested and assembled in its own facilities, enabling rapid prototyping and product roll-out that are also critical to customer requirements.
Furthermore, by introducing more innovative products, faster, Supermicro is seeking to sustain advantages in both time-to-market and breadth of products incorporating the latest new processors, advancements in storage, and evolving I/O technologies. Recent product additions include the Universal GPU server, which enables customers to choose the most suitable CPUs and GPUs, and switch configurations for their specific applications and workloads; along with the SuperEdge multi-node Server for 5G, IoT, and edge applications which increases node density by 50% for high-density computing at the intelligent edge. These are some of the latest developments leveraging Supermicro’s in-house design capabilities, that are giving customers a broad choice of products tailored to their specific application requirements. A capability that is increasingly vital in a rapidly changing tech landscape.
Beyond serving traditional needs for server and storage systems, Supermicro is looking to capitalize on new applications and technologies with substantial resources developing systems that support emerging and growing applications including cloud computing, AI, 5G, and edge computing, among others. The company believes there are significant opportunities in each of these rapidly developing markets due to the stringent design requirements for these applications, where it can further leverage its capabilities in product innovation, superior time-to-market, and portfolio breadth.
In particular, with applications like ChatGPT that heavily count on large language models and generative AI, the state of AI infrastructure business has grown rapidly. This momentum has benefited Supermicro greatly as it is deploying many of the world’s leading and large-scale GPU clusters. In addition, it has built a close and collaborative relationship with NVIDIA over the years by co-developing and offering the most optimized and fastest time-to-market GPU platform on the market. Aligning new-generation product designs with partner ecosystems is highly complex and remains a key competitive advantage.
Traction in Supermicro’s strategy has been highlighted in the latest quarter as it achieved a record pace of GPU leading-edge design wins and growing backorder, including winning at least two new global top 20 customers. It refreshed its entire product portfolio based on new CPU, GPU, Storage, and Fabric technologies from key partners including NVIDIA, Intel, AMD, and others. While it also saw increased customer demands for its rack-scale PnP solutions and continued expansion and transition from a server/storage hardware manufacturer to a Total IT Solutions provider.
Supermicro has delivered a remarkable record of largely doubled-digit growth over the past decade, culminating in $5.2 billion in annual revenue for 2022, achieving an impressive 46% increase from $3.56 billion in the previous year. This trend has been sustained into the first nine months of 2023, with sales reaching $4.94 billion, again surging from $3.56 billion during the same period in FY22. This upward trajectory is largely attributed to Supermicro’s continued engagements in new-generation product lines, notably in AI applications, and the adoption of their plug-and-play rack-scale solutions by top-tier customers.
Furthermore, Supermicro has also seen improvements in its gross margin, increasing to 18.5% in the first nine months of FY23, up from 14.4% during the same period in FY22. While despite operating expenses increasing overall, as a percentage of total net sales they have dropped from 9.6% in the first nine months of FY22 to 7.6% in FY23
Looking ahead, management is forecasting to close out FY23 with net sales ranging from $6.6 billion to $6.8 billion, in line with consensus expectations for strong double-digit growth of 30% year-over-year once again. Management is forecasting earnings per share of $10.50 to $11.00 for FY23, again in line with consensus estimates of $10.87, representing an enormous 92% surge on the FY22 result at $5.18 per share.
The server hardware market is highly competitive, rapidly evolving, and subject to continuous technological advancements and changing customer needs. The company faces stiff competition from a diverse group of players, ranging from global technology vendors like Cisco, Dell, Hewlett-Packard Enterprise, and Lenovo, to original design manufacturers (ODMs) like Foxconn, Quanta Computer, and Wiwynn Corporation. In recent years, competition from ODMs has intensified as they leverage their scale and low-cost manufacturing capabilities to offer their own branded products.
Despite this intense competition, Supermicro believes its strengths lie in its ability to identify emerging opportunities, offer cost-effective, scalable solutions with high performance, and provide efficient and localized customer support. Supermicro’s continued focus on being the first to market with new, emerging technologies and its robust product interoperability set it apart.
With an established legacy of technological innovation and robust growth, Supermicro continues to embrace cutting-edge trends. Leveraging its superior in-house design capabilities, a broad product portfolio, and strategic partnerships, the company is aptly positioned to cater to the diverse and rapidly evolving needs of its global customers.