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Stock Markets April 30, 2026 06:22 AM

Delta Electronics Flags Rising Costs as AI Data Centre Demand Accelerates

Company reports strong revenue and profit growth but warns of higher input costs amid tight capacity and supply shortages

By Priya Menon
Delta Electronics Flags Rising Costs as AI Data Centre Demand Accelerates

Delta Electronics, a key supplier of power and cooling systems for AI data centres, said it anticipates rising costs in coming quarters due to higher oil prices and persistent material shortages, even as sales and gross profit climbed sharply on demand from AI-driven data centre builds. The company reported robust first-quarter results and said capacity remains constrained as it expands operations across multiple countries.

Key Points

  • Delta Electronics expects input costs to rise due to higher oil prices and ongoing material shortages, and notes signs of inflation driven by AI demand - impacts supply chain and industrials sectors.
  • The company is expanding capacity in China, Thailand, the United States and Taiwan while reporting tight existing capacity - relevant to manufacturing, logistics and capital goods markets.
  • First-quarter revenue rose 34% to T$159.35 billion and gross profit increased 56% to T$59 billion, while market value ranks Delta as the second most valuable company on the Taiwan exchange at $178.46 billion - significant for equity markets and semiconductor supply-chain investors.

Delta Electronics, a major maker of power supply and cooling equipment used in artificial intelligence data centres, warned investors that costs are likely to increase over coming quarters. Management pointed to higher oil prices and ongoing shortages of materials as drivers of upward pressure on expenses, and said there are early signs of inflation linked to demand from the AI sector.

The company said capacity remains tight as it scales production and is actively expanding operations in China, Thailand, the United States and Taiwan to meet demand. In February the firm disclosed capital expenditure of T$46.1 billion for 2025, and on Thursday it reiterated that capital spending will be higher this year.

Delta counts major technology names among its customers, including Nvidia and prominent cloud service providers such as Google and Meta Platforms. The firm is the second-largest company by market value on the Taiwan stock exchange, with a market capitalisation of $178.46 billion, trailing only Taiwan Semiconductor Manufacturing Co Ltd.

Financial results for the first quarter reflect strong momentum from the AI data centre build-out. Revenue rose to T$159.35 billion, an increase of 34% compared with the year-earlier quarter. Gross profit increased 56% year-over-year to T$59 billion. Share performance this year has been notable, with Delta Electronics shares up 124.82% year-to-date, substantially outperforming a 34.4% rise in the broader market. Shares closed flat on Thursday ahead of the companys earnings release.

The companys warnings on costs come as it pursues geographic expansion and higher capital investment to support increased demand. Management highlighted that material shortages remain a constraint on capacity expansion even as it deploys additional resources in its key markets.

Exchange rate context provided in the companys disclosures shows $1 equals 31.7170 Taiwan dollars.

Contextual note - The company emphasized both strong revenue and profit gains driven by AI data centre demand and near-term cost pressures linked to commodities and supply constraints. The situation underscores the balancing act between rapid top-line growth and input-cost inflation in capital-intensive supply chains.

Risks

  • Rising oil prices and persistent material shortages could increase production costs and compress margins - affecting electronics manufacturers and data centre equipment suppliers.
  • Tight capacity despite ongoing expansion may constrain the companys ability to convert demand into shipments, presenting risks for delivery schedules and revenue recognition - relevant to cloud providers and OEM customers.
  • Higher capital expenditure commitments, reiterated as increasing this year, carry execution and funding risks if costs escalate or demand patterns shift - impacting capital-intensive industrials and investor returns.

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