One of the largest and least obvious beneficiaries of the AI boom in Taiwan has been the local company King Slide Works—a manufacturer of furniture hinges and drawer slides, reports The Wall Street Journal. The company also makes rail-based mechanisms for server racks, demand for which is growing along with the construction of data centers.
Since the beginning of the year, its shares have risen by nearly 280%, and the founder Lin Zong-qi’s net worth has reached $20.2 billion, making him Taiwan’s richest person, according to Forbes. He overtook Foxconn founder Terry Gou, whose company also benefited enormously from building AI infrastructure.
As the WSJ writes, King Slide controls about 80% of the high-end guide rails market for server racks. These mechanisms must withstand extremely heavy equipment and not interfere with its cooling: a failure can take an entire rack worth millions of dollars out of service. That is why customers look primarily at reliability rather than price. “When an AI rack costs millions of dollars, customers don’t care about the price of the guide rails. They care about quality,” explains Brady Wang, an analyst at Counterpoint Research.
This position allows King Slide to earn more than many tech giants. In the last quarter, the company’s gross margin hit 87%, compared with roughly 50% a few years earlier. “Even for the AI era, this is an unusually high figure: analysts note that physical hardware makers very rarely achieve this level of profitability,” the WSJ writes. For comparison, at TSMC the figure is 68%, and at Nvidia — 75%. King Slide says its high margins come from technological advantages built over 20 years of engineering development.
Analysts believe King Slide could capture an even larger share of spending on AI infrastructure. Cloud companies are moving to their own chips, liquid cooling, and denser placement of equipment. As a result, it becomes necessary to redesign servers, racks, and related equipment, which increases demand for specialized and more expensive guide rails, the publication notes. Competition is also intensifying, however: Daiwa Securities expects the company’s share in orders related to Nvidia to fall to about 75% next year, as the chipmaker attracts new suppliers.