With the increasing implementation and demand for edge AI applications, DRAM manufacturer Innodisk stated that its edge AI projects have been progressing smoothly with AIoT-related businesses accounting for 21% of its overall revenues in the first half of 2024, rising from 2023's 19-20%, and the company is aiming to raise the share by an additional 2pp from the first half in the second half of 2024.
Innodisk's consolidated revenue for the first half of 2024 achieved NT$4.366 billion (US$137 million), a slight 4.2% growth from its 2023 performance. Overall, revenue appears to be growing each quarter with a stable gross margin. With the IPC market hitting rock bottom, demands will soon gradually return, making its growth in revenue and profit greater in the second half of 2024 than in the first half.
Chairman of Innodisk, Randy Chien, stated that the company's performance for the first half of the year in the US market appears to have recovered substantially. Although their performance in the Chinese market was limited by the poor local economy, there are already several projects in progress that would allow contributions from places like the US and China to improve greatly in comparison to results from 2023.
In terms of the price trend for memory in the second half of the year, Innodisk believes that the increase in capital expenditure would be limited in 2025, and the industry would experience a comparative decrease in supply overall. Market price should still be able to rise at a stable rate in the future, though the amount is less certain.
In terms of its business layout, Innodisk's performance in the Japanese market has shown good growth in the last two years, and there are plans to purchase another office with the move happening by the end of 2024. Its main office in Xizhi provides another 1,000 square meters, which will be used for future research and development.
As for Innodisk's Yilan R&D and Manufacture Center, which opened at the beginning of July, its primary production includes production lines from Innodisk's subsidiary, Aetina, Innodisk's AI solutions, and camera modules. Availability is expected to continue increasing, with its recent utilization at about 60-70%. Plans to establish a third factory in Yilan are also being made.
Innodisk to place future focus on edge AI expansion
Innodisk has continued to develop AIoT for 10 years and has expanded to edge AI in the last three to five years. Edge AI has become Innodisk's main focus for the future, where it would help clients with smart transformation using edge AI. Edge AI is now active and will begin a trend towards industrial AI.
Due to the continuous development of cloud AI, the implementation of business and industrial AI would become imperative and even more complex. Innodisk released an AI solution framework to help clients implement edge AI flexibly, such as through storage, camera modules, solutions to accelerate performance computing, and AI model training and inference.
The trend in edge AI development in 2024 was as Innodisk expected. The company's AI revenue percentage will also increase, and it believes its memory and storage businesses will also rise.
Innodisk plans to release AI-assisted products with high speed and high capacity, including CXL-related plans to be released in the latter half of the year. The company will also provide no-code AI software development tools, allowing clients to evaluate the application of AI POC.
Aetina's focus is on edge AI projects. It had about 600 projects in 2023, while projects that began in the first eight months of 2024 have accumulated to a number equivalent to the total annual amount in 2023. Although operation costs rose and affected profit performance in 2023 due to the addition of research personnel, the revenue and profit and loss performance for 2024 should grow steadily.
Director of Finance at Innodisk, Li-Cheng Wang, stated that Aetina's edge AI mostly belongs to production lines that were released during its early stages and would have gross margins more prone to being affected by the complexity of each case, causing the overall gross margin to be unstable. However, it would probably remain around the average value. In the long run, the products should provide high added value, which would help the gross margin to improve later down the line.
