JSE-listed Altron anticipates its artificial intelligence (AI) factory will be a net creator of jobs, bucking a global trend of widespread tech industry layoffs − a number that is set reach more than 244 000 by year-end.
CEO Werner Kapp tells ITWeb that the AI factory – launched towards the end of last month and the first of its kind in South Africa, if not Africa – has the potential to enable small local companies to join forces with Altron and its partners in the digital ecosystem, while also creating jobs.
“We hope to grow our people because Altron Digital Business is the go-to market for that AI factory,” says Kapp, speaking yesterday following the release of the company's interim results to end-August.
However, he declined to specify how many jobs the initiative might create, noting “it's early days for the AI factory”.
Alan Cohen, a data analyst at RationalFX, recently said over 202 000 tech workers have been laid off this year, with total losses expected to exceed 244 000 due to increasing AI use, including cuts at Amazon, IBM, Duolingo and HP.
South African companies are already involved with the factory, including translation start-up Lelapa AI, an Africa-centric AI research and product lab.
Analytics firm Dataviue, headquartered in Pretoria, has partnered with Altron to provide clients with customised systems that it says on its website “transform data into actionable insights”.
Education non-profit MathU, which works with young people in South Africa and schools across Africa using AI and personalised learning via video, is also on board.
“You can create a real platform ecosystem here where, for example, we can not only just service customers with AI, but we can also create opportunities to connect emergent SMEs and their competencies to end customers.”
Kapp adds that “the more South African-ness you put into it, the better it should serve a local market”.
International partners include NVIDIA – currently the most valuable company in the world with a market capitalisation of $3.5 trillion – which provides core AI infrastructure and accelerated computing.
ASUS supplies high-performance computing infrastructure, Hewlett Packard Enterprise delivers the marketplace software that enables integration of AI services, while Teraco hosts the AI factory in its data centre.
NVIDIA describes an AI factory as a purpose-built computing system that transforms raw data into intelligence, supporting the full AI life cycle.
The AI factory is part of Altron's growth strategy at a time when its digital business took a knock in the interim period due to muted IT spending by major South African enterprises. Revenue from the digital unit decreased 10% to R1.5 billion, with operating profit moving into the red with a loss of R42 million from a prior year profit of R34 million.
Altron Digital Business has implemented a profit improvement strategy aimed at removing R150 million from its cost base, with the listed company noting the cost-cutting will reflect in its 2027 full-year results.
In the six months to end-August, Altron invested R370 million in capital expenditure, which includes R342 million on growth initiatives such as the AI factory.
Kapp notes the company's strong balance sheet – the result of “real fiscal capital discipline” – enables Altron to make acquisitions if opportunities arise and makes it possible to “deploy capital quite rapidly when we see these transformative growth opportunities”.
Although Altron reported a 1% decline in revenue on the back of muted IT spending, headline earnings per share – a key measure of profitability – gained 22% to 96c. The company also declared a dividend per share of 48c, up 20% from a year ago.
“The strength of our diversified portfolio and our platform businesses specifically have really pulled us through,” says Kapp. Altron's platform unit comprises Netstar, Altron FinTech and Altron HealthTech.
Share