View transcript
<p style="tab-stops: 81.0pt;" class="MsoNormal"><strong style="mso-bidi-font-weight: normal;">Your capital is at risk.</strong></p>
<p> </p>
<p>When we think about the future of technology - AI, cloud computing, everything becoming faster and more connected - it can be easy to focus on the software. But behind every AI breakthrough sits something much more physical: vast data centres moving unimaginable amounts of data every second of the day.</p>
<p>These data centres may be rarely seen, but they operate on a small town’s worth of power, packed into rows of windowless boxes. </p>
<p>That’s why we invest in Accton Technology in Taiwan - a company that makes networking switches used in modern data centres. These switches connect thousands of servers, so that they can operate as one system.</p>
<p>Now, this can be difficult to visualise - so imagine a data centre as a city, where the servers and GPUs are like the buildings, and then the cables connecting them would be like the roads. And Accton’s switches are like the traffic lights, directing the flow of traffic. So without them, everything would back up - and performance would collapse.</p>
<p>AI has only accelerated the demand for Accton’s switches - because at scale, AI doesn’t work without fast, reliable networking.</p>
<p>In the past, this networking equipment was sold with both the hardware and the software bundled together. That made it expensive and meant that the market was dominated by a handful of large suppliers.</p>
<p>Accton saw an opportunity to take a different approach. It focused on manufacturing the high-quality hardware only – letting their customers run their own software on top. So for large cloud companies, this is cheaper, more flexible, and easier to upgrade as the technology evolves. </p>
<p>Accton also has a second business in producing AI accelerator cards. These handle the most demanding calculations so that the main chips can run faster and more efficiently. </p>
<p>So the company is now in a position to benefit from two powerful needs: connecting AI servers, and helping them to perform better.</p>
<p>Accton still isn’t a household name, but it’s hard to replicate what it does - and what gives us confidence is how deeply embedded it is with its customers. Its relationships with hyperscalers like Amazon, and now Meta, are built on a long track record of delivering the right products at the right time, even as the technology keeps moving.</p>
<p>So whilst the tech may sound complex, the business case is very straightforward: Accton operates in a specialised niche, has built a dominant market position, and benefits from deep customer relationships. And, as AI becomes more central to our lives, the infrastructure holding everything together is becoming more valuable – and that’s exactly where Accton sits.</p>
<p> </p>
<h3>Risk factors</h3>
<p>This communication was produced and approved in March 2026 and has not been updated subsequently. It represents views held at the time and may not reflect current thinking.</p>
<p>The views expressed should not be considered as advice or a recommendation to buy, sell or hold a particular investment. They reflect opinion and should not be taken as statements of fact nor should any reliance be placed on them when making investment decisions.</p>
<p>This communication contains information on investments which does not constitute independent research. Accordingly, it is not subject to the protections afforded to independent research, but is classified as advertising under Art 68 of the Financial Services Act (‘FinSA’) and Baillie Gifford and its staff may have dealt in the investments concerned.</p>
<p>All information is sourced from Baillie Gifford & Co and is current unless otherwise stated.</p>
<p>The images used in this communication are for illustrative purposes only.</p>
<p><strong>Important Information </strong></p>
<p>Baillie Gifford & Co and Baillie Gifford & Co Limited are authorised and regulated by the Financial Conduct Authority (FCA). Baillie Gifford & Co Limited is an Authorised Corporate Director of OEICs. </p>
<p>Baillie Gifford Overseas Limited provides investment management and advisory services to non-UK Professional/Institutional clients only. Baillie Gifford Overseas Limited is wholly owned by Baillie Gifford & Co. Baillie Gifford & Co and Baillie Gifford Overseas Limited are authorised and regulated by the FCA in the UK.</p>
<p>Persons resident or domiciled outside the UK should consult with their professional advisers as to whether they require any governmental or other consents in order to enable them to invest, and with their tax advisers for advice relevant to their own particular circumstances.</p>
<p><strong>Financial Intermediaries</strong></p>
<p>This communication is suitable for use of financial intermediaries. Financial intermediaries are solely responsible for any further distribution and Baillie Gifford takes no responsibility for the reliance on this document by any other person who did not receive this document directly from Baillie Gifford.</p>
