(Bloomberg) -- Density matters to Super Micro Computer Inc.
To meet customer demands to take up less space, the maker of servers is reducing the number of cables inside its products, their structure revamped to make room for more processing power and memory. That’s putting the focus on improving designs for the computers that run networks, as the San Jose, California-based company seeks to boost performance, without making the package bulkier, to win clients from Dell Inc. to Lenovo Group Ltd.
“All tier one companies are about design,” Chief Executive Officer Charles Liang said in an interview. “You will find our density 50 percent higher. We save customers lots of space.”
Fewer cables also brings better air flow. That, combined with shared adapters and fans, results in less power waste. Liang said more than half of Super Micro’s servers meet the highest levels of power efficiency in the market.
Super Micro’s relationship with Apple Inc. has attracted more attention recently. Apple cut ties with the company due to security concerns with its servers, the Information reported last month. Liang said no “valid security concern” had been found.
But with another technology giant, Super Micro has forged a strong connection. Intel Corp., its main supplier of processors, recently installed more than 36,000 high-density units in its data center in Silicon Valley. The relationship gives Super Micro a preview of Intel’s new chips.
Super Micro Chief Financial Officer Howard Hideshima told analysts in January that when Intel launches a new product, its engineers work alongside a Super Micro crew, giving the latter an edge in preparing its next servers.
“Intel obviously has the best CPU, chipset and networking technology,” Liang said. “Super Micro has the expertise to design hardware for whatever computer systems. I feel we’re pretty lucky indeed.”
Shares of Super Micro have slumped 11 percent this year, partly on the reports of security issues. Of the seven analysts covering the stock, five recommend buying and the other two have hold ratings.
"All server companies work around Intel, and Super Micro holds a close position to it," said Thomas Zhou, an analyst at research firm IDC. "That can help and limit its product line at the same time."
Liang founded Super Micro 24 years ago, mainly to sell a much simpler product: motherboards, the main circuit board that sits at the heart of most personal computers. It now does assembly at eight plants worldwide.
About a third of the company’s 3,000 employees are engineers, responsible for everything from motherboards to chassis and power supply. At its factory near Taipei’s main international airport, workers were busy putting together servers that were no bigger than a PC to those large enough to fill an elevator.
The plant produces 10,000 servers a month, contributing to Super Micro’s shipment of 1.6 million units a year. Liang said that number, which includes bare-bones units, would lift it into position as the No. 3 server maker globally.
“We grow at a much faster pace than our industry overall,” Liang said. “The goal is to grow market share.”
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