Obvious beneficiaries of the AI boom include Nvidia and memory makers, but there are companies in certain market segments that it was hard to doubt they could get rich so quickly under current conditions. In Taiwan, for example, the AI boom has made the founder of a company that started out making furniture accessories the island’s richest man.
Image source: NVIDIA
as explained wall street journalLocal company King Slide Works historically specialized in making hinges and slides for furniture drawers, but later mastered the production of server rack slides and really made a fortune during the artificial intelligence boom. It now controls about 80% of the space and has higher gross margins than Nvidia. Since the beginning of this year, the stock price of Jinhua Factory has risen by nearly 280%, making its founder Lin Zongji the richest man in Taiwan.
Forbes currently estimates Lin’s wealth at $20.2 billion, which puts him ahead of Foxconn CEO Terry Gou. The latter has also made a lot of money from the artificial intelligence boom, as his company has become the largest contract manufacturer of server systems based on Nvidia components. Last quarter, the Taiwanese server rack guide rail manufacturer’s gross profit margin increased from 50% to 87% compared with the same period last year. If memory manufacturers can still boast comparable profitability despite severe shortages, it would be nearly impossible for hardware vendors to achieve such levels under other circumstances. The gross profit margins of TSMC and Nvidia are significantly lower, at 68% and 75% respectively. Only the British Arm, which sells its processor architecture licenses, can achieve a gross profit margin of 97%.
At the same time, King Slide Works insists that the current technical perfection of its products has been achieved through two decades of hard work, and believes that the current financial performance is a natural reward for the efforts. Experts believe that server infrastructure will continue to evolve towards more personalization and an expanded range of specialized accessories, which will allow its vendors to further improve their financial positions.
King Slide Works has its own factories in the United States, but analysts believe Nvidia will inevitably diversify its sourcing pipeline for related parts. Therefore, King Slide Works’ global market share may drop to about 75% by the end of next year.
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