Apple’s main contract manufacturing partner, Foxconn Technology Group, said it expects revenue to grow in the current quarter and for the rest of year, after reporting a profit rise boosted by demand for servers powering artificial intelligence (AI) applications.
The Taiwan-based company, formally known as Hon Hai Precision Industry, said on Wednesday that net income in the June quarter was NT$35 billion (US$1.1 billion), largely in line with analysts’ expectations.
Revenue for the period, released earlier, surpassed estimates and came in at NT$1.55 trillion, up 19 per cent year on year. This was helped in large part by its growing business of supplying data centre operators with servers containing Nvidia’s AI accelerators.
Foxconn, Apple’s primary iPhone supplier, has set itself the goal of securing 40 per cent of the global AI server market, relying on its close relationships with many of the world’s biggest technology companies and depth of manufacturing expertise.
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Apple supplier Foxconn to build ‘AI factories’ using US hardware leader Nvidia’s chips and software
Apple supplier Foxconn to build ‘AI factories’ using US hardware leader Nvidia’s chips and software
Shares of the world’s largest electronics contract manufacturer are up close to 80 per cent this year, as investors have bought into the AI pitch.
Earlier this month, compatriot Taiwan Semiconductor Manufacturing Co (TSMC) said its July revenue rose 45 per cent, outpacing estimates for the quarter and suggesting that AI demand remained robust.
“Given the global increase in AI applications, AI servers are likely to become Hon Hai’s key growth engine given its strong partnership with Nvidia,” Bloomberg Intelligence analyst Cecilia Chan said.
“Its robust logistics and manufacturing capability could keep its iPhone assembly share above 50 per cent even as Apple diversifies suppliers, but further ratings upgrade may be capped by low single-digit margins.”
People walk past the logo of Foxconn Technology Group, formally known as Hon Hai Precision Industry, in New Taipei City in northern Taiwan. Photo: EPA-EFE
Shipments of iPhones in China have in recent months reversed a slump from the start of the year, and the global smartphone market is accelerating its growth.
Foxconn, much like TSMC, benefits from any upsurge in consumer electronics demand, and the addition of AI features and enhancements is widely seen as a catalyst driving users to upgrade their devices.
Foxconn’s July sales jumped 22 per cent, thanks to AI server sales, and the company’s Wednesday report indicated it expects growth across most of its business segments in the current quarter.
The company expects strong growth from its cloud, networking and components groups, while smart electronics – iPhones included – are set to be roughly flat for the full year.
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