(Yicai) April 24 -- Chinese manufacturers of telecommunication racks and cabinets have seen exports grow over the past year, mainly thanks to the expansion of the global artificial intelligence sector and the surge in data center construction.

"The first-quarter revenue growth was the largest we've seen in years," Wang Lei, senior vice president of Safewell Group Holdings China, told Yicai at this year's spring leg of the bi-annual China Import and Export Fair, better known as the Canton Fair.

The global data center rack market is expected to top USD9.4 billion by 2033 from USD4.5 billion in 2024, driven by booming demand for AI, the expansion of hyperscale data centers, and the global emphasis on data sovereignty, among other factors, according to a recent report released by market research and consulting firm Astute Analytica.

Safewell's income from telecom equipment jumped by triple digits in the three months ended March 31 from a year earlier, with its cabinets primarily used in data centers of major tech firms in the United States, Europe, and Southeast Asia, Wang pointed out.

Due to surging chip prices over the past two years, the industry has become less sensitive to the price of other infrastructure products, such as data rack and cabinet, Yin Yongping, general manager of Safewell's telecom equipment unit, said to Yicai. More emphasis is instead placed on comprehensive factors, including delivery time, quality, service, price, and customization capabilities, presenting new opportunities for Chinese suppliers, he pointed out.

"A new production line in China can be completed in as little as three months, while abroad similar projects take more than a year," Yin stressed.

The sales manager of Beijing-based telecom cabinet maker Finen Electronic Equipment said to Yicai that because of the substantial demand driven by the construction of data centers overseas, "our products will likely remain in high demand for at least another 30 years."

Lifted by the substantial demand for data center construction in China and abroad, market demand for integrated, server, and traditional network cabinets is rapidly growing, Yu Weizu, domestic market director at Otrans Communication Technologies, told Yicai. Cabinets designed to meet AI computing gear requirements, with ample space reserved for high-speed optical fiber cabling, are becoming even more sought after, Yu noted.

Demand for cabinets in Southeast Asia primarily comes from the construction of AI data centers, while the European and Latin American focus is more on applications related to upgrades in power grids and telecom equipment, Fan Ruifang, sales manager of Hangzhou-based Otrans, said to Yicai, noting that Germany, Switzerland, France, and Italy all have significant demand for cabinets.

Otrans is exploring locations in Malaysia and Vietnam to build new factories and expand production capacity to better meet overseas demand, Fan revealed. In addition, it aims to ally with high-end brands in the United States, Fan said.

Safewell is also planning to set up a factory in Vietnam, but while building plants in Southeast Asia offers advantages in labor and raw material costs, it presents challenges with shortages of skilled labor, quality control issues, unstable power supply, and others, Yin noted, adding that some components and raw materials still need to be imported from China.

"Southeast Asian factories cannot operate independently in terms of management, technology, or supply chain without support from the Chinese headquarters," Yin stressed.

Editors: Tang Shihua, Martin Kadiev