Inspur Server Shipments Decline for Two Consecutive Quarters, Dr

Huawei Arm Server Shipments Hover at Lows; 10,000 Units in a Sin

Core Overview: Deep in the Trough of the "10,000 Unit Defense Battle" According to the latest data from DataTrack, Huawei's Arm architecture server shipments in the third quarter of 2022 recorded 10.0 K (10,000 units). Although this represents a technical rebound from the historical low of 5.0 K in the previous quarter, observing the long-term cycle, this figure is merely 3.4% of the historical peak in the third quarter of 2019 (290.0 K). Compared to the 65,000 units in the same period last year (2021 Q3), the year-on-year decline reached as high as 84.6%, indicating that after exhausting its chip inventory, Huawei's server business remains in an extremely difficult survival mode. Key Details: The Double Blow of Inventory Depletion and Business Spinoff Observing long-term trends, Huawei's server shipments maintained a high level of over 200,000 units per quarter before the second quarter of 2021, followed by a cliff-like drop. This collapse was primarily driven by two specific factors: x86 Business Divestiture: Huawei sold its entire x86 server business (now xFusion) at the end of 2021, causing total volume to evaporate instantly. Arm Chip Inventory Depletion: The remaining Arm business (Kunpeng series) is highly dependent on TSMC's 7nm process. One year after US sanctions took effect, chip inventory officially bottomed out in 2022, causing quarterly shipments to plummet from hundreds of thousands of units to single-digit thousands (5-10k). Deep Attribution: Process Technology Constraints and Supply Chain Restructuring Market analysis firms Omdia and TrendForce point out that the root cause of Huawei's Arm server plight lies in the broken supply chain. Since the Kunpeng 920 processor cannot be manufactured at TSMC, and domestic alternatives like SMIC were unable to fully fill the 7nm mass production gap in 2022, this led to a dilemma of "having designs but no chips." Furthermore, Digitimes analysis also mentioned that Huawei's current strategy has shifted to "protecting the core," prioritizing limited capacity for its cloud business (Huawei Cloud) and critical infrastructure, rather than the large-scale commercial shipments of the past. Outlook and Risks: Short-term Shortages Difficult to Resolve, Mid-term Focus on AI Transformation Short-term (1-2 months): Shipments are expected to continue fluctuating at the low level of 10,000-20,000 units. Without a source of advanced process chips, traditional General Purpose Servers will find it difficult to return to a growth trajectory, and market share will continue to be carved up by Inspur and the newly established xFusion. Mid-term (3-6 months): The focus of observation lies in the transformation to "AI servers." With ChatGPT driving demand for computing power, Huawei is actively shifting its focus to the Ascend AI chip series. If the supply chain can break through bottlenecks in packaging or sub-advanced process yields, AI servers have the potential to become the next growth point, but returning overall total volumes to 2020 levels remains extremely difficult. Web Search Reference Sources https://vertexaisearch.cloud.google.com/grounding-api-redirect/AUZIYQEdOx-aDoQIN7lJ_odAW9umrwy57aTgAJhvBbHPI9JmQH7ZXj4TcHk1SwCli6po0AYpeUrPAFp_OA9d4rNh7OlJ8mK5glratqOExZ2CNz5nL3JWxXzr40zqegLf2vEb5gjuExfX6CFJAF1p8gR45y-0fa0tdKjNK3zyuMhvWeatMRJTJT4D4u_O2k8F https://vertexaisearch.cloud.google.com/grounding-api-redirect/AUZIYQG2DLoIvkXhcZUCeUS9S7jW1TQbxS_7e1AlLd4o_9NPh_owtV-dgnItedoTfyeuc-8rLdN0F_uQndpLvuxM2RcKMU3C9rC0_OI0A2bDoeEWYc4V55jwxqVnt6e7lLXDg5T4Vz7PRF51Y45OKERZvOW7xxQjj3Xj https://vertexaisearch.cloud.google.com/grounding-api-redirect/AUZIYQH5U12x979Pj7IwBK8P8VjBt8AXTKL40Ku1I4DdWgVs4BxgAr1ZyFrEx32dDo9vYandgYMIdDwJMPGfmITlPSAc_252OImiF4xlkk8jITpDyOrh--_ar1WkKS7vSWSvS41YJVertR3XYr6DFWAWEsVTVNYjL-Lkq4oEW4dDxiS814esyDVoixhAyOkOlxOQPZkUucV-EGho-dYGvLw4U7FNZXSDVUw=