Elon Musk’s xAI Shifts AI Server Orders Away from Supermicro

Elon Musk’s xAI Shifts AI Server Orders Away from Supermicro

xAI, Elon Musk’s artificial intelligence (AI) venture, has reportedly shifted its substantial AI server orders from Supermicro to Dell. This move is a significant blow to Supermicro, which has been facing mounting legal and financial challenges. Dell, on the other hand, is well-positioned to absorb the substantial orders and capitalize on the growing demand for AI servers.

Fallout from Supermicro’s Troubles

Supermicro’s troubles began with allegations of accounting manipulations and potential export violations to China and Russia. The U.S. Department of Justice’s probe into these allegations caused the company’s stock to plummet by 35% in a single day. Musk’s companies, including xAI and Tesla, decided to distance themselves from the troubled company by shifting their orders away.

Dell’s Beneficiaries

Among the largest AI server suppliers, Dell is a major beneficiary of Supermicro’s misfortune. Wistron, a company that produces motherboards and assembles servers for Dell, is poised to benefit significantly from the order shift. Wistron is already expanding its production capacity to meet the surging demand for AI servers, particularly in its facilities in Taiwan and Mexico.

Inventec’s Opportunity

Inventec, another prominent Dell supplier, is also expected to gain from the order realignment. The company has longstanding experience in AI server production and is one of Dell’s top three global assembly partners. Inventec’s focus on Nvidia’s Hopper and Blackwell-based processors positions it well to produce AI servers for companies previously served by Supermicro.

Supermicro’s Delisting Risk

Supermicro’s challenges are compounded by delayed financial filings that have put the company at risk of being delisted from NASDAQ. To avoid delisting, Supermicro must submit a plan by November 18 explaining the filing delay and specifying when the required annual report will be filed. Failure to meet this deadline could result in severe financial consequences, including a sharp decline in stock value and the immediate repayment of $1.725 billion in convertible notes.