Expert: US patent probe poses limited near-term risk to Foxconn, Quanta and Delta

An intellectual property dispute involving AI server power-delivery technology could eventually threaten shipments to the United States, but an industry expert says Delta Electronics faces greater exposure than server assemblers Foxconn and Quanta.

A patent dispute engulfs Taiwan’s AI supply chain

The US International Trade Commission (USITC) has launched a Section 337 investigation into alleged patent infringement involving AI server power-delivery systems, naming Taiwanese manufacturers Delta Electronics Inc., Hon Hai Precision Industry Co. (Foxconn) and Quanta Computer Inc. among 20 respondents.

However, CFA-qualified analyst Tsai Ming-han (蔡明翰) cautioned that the immediate commercial impact is likely to be limited, with Delta warranting closer scrutiny than its assembly-focused peers.

The investigation, announced on Oct. 9, follows a Sept. 9 complaint by US power technology company Vicor Corp.

Vicor alleged that certain imported products and computing systems incorporating vertical power delivery technology infringe its patent. It has asked the commission to impose a limited exclusion order and cease-and-desist orders against the respondents.

The investigation also encompasses international component suppliers and manufacturers, underscoring the dispute’s reach across the AI server supply chain.

What Section 337 means

Section 337 of the Tariff Act of 1930 empowers the USITC to investigate unfair practices involving imported goods, including alleged intellectual property infringement.

Unlike trade measures that impose additional tariffs, its principal remedies can prevent products found to infringe from entering the US market or require companies to cease specified sales activities.

The USITC has not yet made a determination on whether any infringement occurred.

Taiwan’s International Trade Administration, a government agency under the Ministry of Economic Affairs (MOEA), said Section 337 investigations typically take 12 to 16 months to complete.

It further stated that the government would continue monitoring the case, maintain contact with the affected companies and provide appropriate assistance if necessary.

While the investigation does not immediately restrict the companies’ shipments, the timeline could give them an opportunity to contest the allegations, assess potential supply-chain exposure and develop alternative designs if warranted.

Why Delta faces greater exposure, according to Tsai

Tsai drew a distinction between component suppliers and original design manufacturers (ODMs).

He said that Foxconn and Quanta primarily assemble server systems, meaning the disputed components may originate with their suppliers. Delta, by contrast, develops and manufactures power-related products of its own, potentially placing it closer to the technological heart of the dispute.

Tsai highlighted how the companies have reported no material operational disruption. Delta said the relevant products remained unaffected and that it would respond through the appropriate legal procedures.

Quanta said it would require suppliers to address the disputed components appropriately, adding that its products and operations had not been affected. Foxconn likewise reported no material impact on production, operations, shipments or customer relationships.

Previous litigation offers a possible road map

Tsai pointed to an earlier dispute involving Vicor and Delta as a useful, though imperfect, precedent. That case proceeded through an extended legal process before a final USITC determination in February 2025, illustrating how patent disputes can leave companies substantial time to prepare. The commission found a Section 337 violation and issued a limited exclusion order and cease-and-desist orders.

Delta’s earlier response included developing alternative products designed to avoid the patents at issue.

Tsai said such redesigns could provide replacement products even if a final ruling went against a company, provided the alternatives were determined not to infringe the patents under review.

The precedent does not establish how the current case will unfold. Nevertheless, Tsai argued that the similar parties and technological context make the earlier dispute instructive: Foxconn and Quanta may be less directly exposed, while Delta has stronger reasons to prepare alternative designs.

Limited immediate impact, but risks remain

For now, the investigation is a legal challenge, not an import ban or a finding of wrongdoing.

Tsai’s assessment is that near-term disruption should be limited and that investors need not overreact to the announcement alone.

The longer-term risk, however, should not be dismissed.

If Vicor prevails, restrictions on affected products could complicate sourcing and product planning across the AI server industry.

For Taiwan’s manufacturers, the next year may therefore be less about immediate shipment losses than about legal preparation, supply-chain coordination and the development of patent-compliant alternatives.