This article first appeared in The Edge Malaysia Weekly on November 10, 2025 - November 16, 2025

OVER a year ago, Ipoh-based ICT solutions provider SNS Network Technology Bhd (KL:SNS) turned to the AI super server supply business to improve its razor-thin margins, expecting stronger gross margins from the segment.

As global suppliers entered Malaysia to tap into the AI data centre investment boom, however, margins in the segment began to shrink, with SNS’ net profit margin falling to just 1.17% in the second quarter ended July 31, 2025 (2QFY2026).

Speaking exclusively to The Edge, SNS managing director and co-founder Ko Yun Hung recalled that AI super server sales were initially highly profitable, with the group expecting gross margins of around 15%.

“Owing to the very good publicity of Malaysia as a destination for data centres, however, the country attracted a lot of ... global competitors to try to capture market share,” says Ko.

“So, when it comes to that part of business, our competition is no longer just local players. We have a lot of international players that we need to compete with, and the pricing is very transparent.”

Listed in 2022, SNS has two business segments: the sale of ICT products, and the provision of device repair and related services; as well as the sale of broadband services. Sales of ICT products made up almost 100% of its revenue in 1HFY2026.

SNS’ net profit margin dropped from 4.08% in 3QFY2025 ended Oct 31, 2024, to 1.17% in 2QFY2026. Meanwhile, gross profit margin slipped to 3.91% from 11.32%, even though revenue surged to RM1.75 billion in 2QFY2026, from RM249.71 million in 3QFY2025.

With margins from the AI super server sales segment becoming as thin as its other ICT distribution business, SNS is banking on its latest venture, GPU-as-a-Service (GPUaaS), for margin expansion.

The GPUaaS business is where SNS rents space in data centres to install its own servers and provide services to companies to apply AI in their businesses, providing cost-effective entry into AI technology.

SNS’ servers use Nvidia H100 graphics processing units (GPUs) — a cutting-edge solution designed for AI and high-performance computing. It is used for applications such as training state-of-the-art language models, running complex scientific simulations and powering advanced cloud AI services.

Ko says many companies and organisations are unsure how to implement AI in their businesses without breaking the bank.

Therefore, with SNS providing the upfront investments and services, many small and medium enterprises, social and educational organisations and government institutions could adopt AI in their operations through flexible subscription models.

SNS’ AI factory — which the group claims is the country’s first locally hosted, fully managed AI cloud infrastructure — is located at Telekom Malaysia Bhd’s (KL:TM) Klang Valley Data Centre facility in Cyberjaya. The SNS AI Factory is powered by 64 Nvidia Hopper GPUs across eight Dell PowerEdge XE9680 servers and supported by Nvidia Quantum-2 InfiniBand networking and Nvidia AI Enterprise software.

Notably, the service is also offered by TM, Maxis Bhd (KL:MAXIS) and IP ServerOne through its NovaGPU service. It is reported that IP ServerOne provides the service at cost of RM1.96 to RM38.18 per hour for the H200 GPU server.

While it is currently renting space at TM’s KVDC facility, SNS is open to the idea of owning data centres in the future, if it supports its business goals, says Ko.

“Our current smaller-scale and flexible model allows us to stay lean and cost-efficient, avoiding the heavy fixed costs faced by infrastructure owners.”

SNS will be investing RM40 million over the next five years in the GPUaaS business, with an upfront RM20 million spend for 64 GPUs for a start. According to Ko, SNS does not have to raise funds for this venture at the moment.

“If this [GPUaaS] runs well, the margin will be high single-digit or low double-digits, depending on what services they want to add in, because different customers will add in different types of services and requirements. So, let’s say it will be in the low double-digits, that means 15%,” he says.

However, the business is expected to remain small compared with its ICT sale and distribution business, which made RM2.6 billion in revenue in 1HFY2025.

The AI super server sales are part of SNS’ ICT sale and distribution business. Ko adds that the segment is expected to see another surge over the next two years, as many data centre investments from the past two years reach completion.

“The next thing is [data centre operators] will need to get the tenants in. So, when the tenant goes in, basically, they want to host a server there. That is where SNS’ opportunity is. So, this year or even next year, when there are more and more data centres completed, there will be a lot of tenants coming to Malaysia,” he says.

Tenants of data centres include multinational companies, cloud providers, apps and game developers.

In May, Ko said SNS was looking to sell 500 AI super servers in the current financial year ending Jan 31, 2026 (FY2026), more than double the 200 units sold in FY2025. The average selling price per AI super server is RM1.5 million, depending on customers’ specifications.

SNS has in the past secured sizeable contracts for the supply of AI super servers, including an RM85.52 million order from an e-commerce platform based in Southeast Asia and Taiwan in June last year, and a RM269.3 million contract from an undisclosed local customer in March last year.

Ko says regular contracts range from RM40 million to RM50 million per order. He says, however, that there could also be repeat orders from existing customers, depending on at what stage of investment they are in.

As at July 31, 2025, SNS’ fixed deposits, cash and bank balances stood at RM219.6 million, up 148% from RM88.4 million as at Jan 31, 2025. At the same time, its short-term borrowings increased to RM112.2 million from RM59.3 million.

Its trade and other payables also rose to RM493.97 million as at July 31, 2025, from RM183.2 million as at Jan 31, 2025. On the other hand, its trade and other receivables increased to RM444.64 million, from RM207.81 million at the start of the financial year.

SNS’s share price has risen from a low of 34 sen on March 4 to 77.5 sen on Oct 6. As at last Thursday, the counter was trading at 64.5 sen, valuing the group at RM1.08 billion.

Save by subscribing to us for your print and/or digital copy.

P/S: The Edge is also available on Apple's App Store and Android's Google Play.