AI Rack Contract Manufacturing Boosts Capex for Liquid-Cooled Testing

Celestica (CLS), Flex (FLEX) and equipment maker ASMPT (ASMVY) said on their quarterly earnings calls on October 27-28, 2026 that AI rack test power is now driving capex at contract manufacturers: to win liquid-cooled AI rack programs, the manufacturers are adding large amounts of factory power and production capacity, and orders for the machines that assemble AI server boards are rising with them [1][2][3].

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Liquid-cooled AI racks must be powered up in the factory

Cloud providers increasingly buy AI servers as complete racks. In rack-level integration (known in the industry as L11), the contract manufacturer installs servers, networking gear, power delivery and liquid-cooling lines in a full rack and powers it up for testing before shipment, so the customer can put it into service on arrival. Expanding capacity used to mean leasing floor space and adding lines, with modest power needs. Jabil (JBL) management offered a comparison on its September 30, 2026 call: conventional data center capacity needs 2 to 4 megawatts per million square feet and can be added in three to four months, while test infrastructure for highly complex AI racks requires 20 to 30 megawatts [4]. Flex said some factories need utility and substation connections, and that this kind of growth takes a couple of years to prepare [2]. Factory power has therefore become a precondition for taking high-end rack programs, and every manufacturer pursuing this work faces it.

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Capex at contract manufacturers has risen to 3% to 5% of revenue

Celestica shows the sharpest change. Its third-quarter 2026 capital expenditures were $274 million, about 4.7% of revenue, compared with 1.2% in the prior-year quarter [1]. The CEO said the company is adding hundreds of megawatts across its network, including at its US sites in Texas. The CFO expects $1.5 billion to $2 billion of capex in 2027; together with working capital for nearly $20 billion of incremental revenue in the 2027 outlook, that will result in a net use of cash in 2027, which the company says the $3.5 billion of equity it raised in August should cover [1]. Flex expects fiscal-year capex of $1.5 billion to $1.6 billion, with roughly two-thirds going to its Cloud and Power Infrastructure business, and its CFO said the spending includes power [2].

The equipment side shows a matching change. ASMPT's surface-mount technology (SMT, the process of placing electronic components onto circuit boards) bookings hit a record for the third consecutive quarter, reaching $564.7 million in the third quarter, up 122.1% year on year, driven largely by AI server boards [3]. Taken together, the three companies' disclosures show that rack capacity spending goes into power and factory space and also into board-assembly equipment.

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High-end rack programs may concentrate in well-funded manufacturers

If high-power test capacity takes years to prepare and billions of dollars to build, high-end rack programs are more likely to go to manufacturers that can fund it in advance, and the asset-light model long used in contract manufacturing may be hard to sustain in this part of the business. This view has clear limits. Jabil said it still runs an asset-light model with capex in the 1.5% to 2% of revenue range, and described high-power rack test capacity as a different profile [4]. Flex also expects capex for its businesses outside AI to return to 2% of revenue or below [2]. ASMPT's bookings included more than $100 million of bulk orders and pull-ins [3], so not all of them can be treated as recurring demand. Points to track next are where Celestica's 2027 capex lands within its range and whether ASMPT's SMT bookings stay high once the pull-ins are absorbed.

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Companies exposed to this shift

• Sanmina (SANM): Its ZT Systems unit is adding power, liquid cooling and test-cell capacity for next-generation AMD rack programs, with quarterly capex at about 2.9% of revenue [5]. It faces the same factory-power threshold; whether its spending rises further has not been verified.
• Super Micro Computer (SMCI): The rack integrator spent only $162 million on capex in fiscal 2026 but raised $5.6 billion of equity for working capital [6]. Its strain currently shows up mainly in funding needs, and it has not disclosed whether it needs more factory power.
• FUJI Corporation (6134.T): It makes SMT placement machines, the same equipment segment as ASMPT, and servers rose from 6% to 23% of its Robot Solutions sales [7]. That data is from February 2026, and newer figures are needed to confirm the trend.

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Sources

[1] Drillr · Celestica (CLS) · 2026-10-27 · Earnings call

[2] Drillr · Flex (FLEX) · 2026-10-28 · Earnings call

In some cases, you have to connect utilities and substations into these factories for the power requirements.

[3] Drillr · ASMPT (ASMVY) · 2026-10-27 · Earnings call

[4] Drillr · Jabil (JBL) · 2026-09-30 · Earnings call

[5] Drillr · Sanmina (SANM) · 2026-07-27 · Earnings call

[6] Drillr · Super Micro Computer (SMCI) · 2026-08-11 · Earnings call

[7] logmi Finance · FUJI Corporation (6134.T) · 2026-02-12 · Results briefing · https://finance.logmi.jp/articles/383665

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This article highlights industry changes and companies that may be overlooked. It is not a stock recommendation.