Foxconn sees robust AI server demand, delays EV target
World’s largest contract electronics maker diversifies supply chain in anticipation of Trump tariffs
14 November 2024 - 13:49
byYimou Lee and Faith Hung
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A woman walks past the logo of Foxconn outside the company’s building in Taipei, Taiwan. Picture: ANN WANG/REUTERS
Taipei — Taiwan’s Foxconn expects robust growth in its artificial intelligence server business next year and will increase investment in several countries amid mounting trade tensions between the US and China, it said on Thursday.
US president-elect Donald Trump has threatened to put a 10% tariff on all US imports and a 60% levy on Chinese-made products, a move that could affect both Foxconn, whose Zhengzhou plant in China is a major iPhone assembly location, and its key client Apple.
The world’s largest contract electronics maker has already been diversifying its supply chain, expanding production in India in particular. It said on Thursday it would continue to increase investment in countries including the US, Mexico and Vietnam.
“Trump has just been elected. It’s uncertain what policies he will implement ... we’ll be watching to see what changes there will be from the new US government,” Foxconn chair Young Liu told reporters after reporting its quarterly results.
He said its plants in Wisconsin and Texas had seen steady growth in sales on strong demand for AI servers, and the outlook for its US operations is positive.
Foxconn, also a key supplier to Nvidia, kept its 2024 guidance of “significant” sales growth as robust sales increases in its AI server business helps it weather a decline in demand for consumer electronics caused by geopolitical and macroeconomic factors.
The company forecast AI servers would account for 50% of its total server revenue next year.
Citing Nvidia CEO Jensen Huang, Liu said demand for Nvidia’s GB series servers were “very crazy” and its shipment for that product will grow quarter by quarter next year as it has ramped up production capacity.
Liu expected Foxconn to take “at least 40%” of the global AI server market and its cloud and networking business, which includes servers, would become its “major product” alongside smartphone.
It is now building the world’s largest manufacturing facility in Mexico for bundling Nvidia’s GB200 superchips, a key component of the US firm’s next-generation Blackwell family computing platform.
Underscoring Foxconn’s rosy prospects, October sales hit a record high for the month and the company, formally called Hon Hai Precision Industry, has said it expects fourth-quarter revenue to grow year-on-year.
It did not provide a numerical guidance.
Foxconn, which has been expanding into contract electric vehicle manufacturing for diversification, delayed its target of a 5% share in the global EV market by 2025 as the industry grapples with slowing demand.
Liu did not elaborate on a new target and said the company should be able to secure orders from traditional automakers in the near term and is now working to finalise EV partnership with two Japanese automakers.
Net profit for the July-September period was T$49.3bn ($1.5bn), according to Reuters calculations using the company’s nine-month results, as sales jumped 20% to a record on strong sales of AI servers.
That marked a fifth quarter of profit growth and compared with a T$46.3bn LSEG consensus estimate from 14 analysts.
Foxconn’s shares have doubled so far in 2024, beating the broader market’s 28% gain, buoyed by its confident outlook on AI.
They closed down 1.4% on Thursday ahead of the earnings release.
Support our award-winning journalism. The Premium package (digital only) is R30 for the first month and thereafter you pay R129 p/m now ad-free for all subscribers.
Foxconn sees robust AI server demand, delays EV target
World’s largest contract electronics maker diversifies supply chain in anticipation of Trump tariffs
Taipei — Taiwan’s Foxconn expects robust growth in its artificial intelligence server business next year and will increase investment in several countries amid mounting trade tensions between the US and China, it said on Thursday.
US president-elect Donald Trump has threatened to put a 10% tariff on all US imports and a 60% levy on Chinese-made products, a move that could affect both Foxconn, whose Zhengzhou plant in China is a major iPhone assembly location, and its key client Apple.
The world’s largest contract electronics maker has already been diversifying its supply chain, expanding production in India in particular. It said on Thursday it would continue to increase investment in countries including the US, Mexico and Vietnam.
“Trump has just been elected. It’s uncertain what policies he will implement ... we’ll be watching to see what changes there will be from the new US government,” Foxconn chair Young Liu told reporters after reporting its quarterly results.
He said its plants in Wisconsin and Texas had seen steady growth in sales on strong demand for AI servers, and the outlook for its US operations is positive.
Foxconn, also a key supplier to Nvidia, kept its 2024 guidance of “significant” sales growth as robust sales increases in its AI server business helps it weather a decline in demand for consumer electronics caused by geopolitical and macroeconomic factors.
The company forecast AI servers would account for 50% of its total server revenue next year.
Citing Nvidia CEO Jensen Huang, Liu said demand for Nvidia’s GB series servers were “very crazy” and its shipment for that product will grow quarter by quarter next year as it has ramped up production capacity.
Liu expected Foxconn to take “at least 40%” of the global AI server market and its cloud and networking business, which includes servers, would become its “major product” alongside smartphone.
It is now building the world’s largest manufacturing facility in Mexico for bundling Nvidia’s GB200 superchips, a key component of the US firm’s next-generation Blackwell family computing platform.
Underscoring Foxconn’s rosy prospects, October sales hit a record high for the month and the company, formally called Hon Hai Precision Industry, has said it expects fourth-quarter revenue to grow year-on-year.
It did not provide a numerical guidance.
Foxconn, which has been expanding into contract electric vehicle manufacturing for diversification, delayed its target of a 5% share in the global EV market by 2025 as the industry grapples with slowing demand.
Liu did not elaborate on a new target and said the company should be able to secure orders from traditional automakers in the near term and is now working to finalise EV partnership with two Japanese automakers.
Net profit for the July-September period was T$49.3bn ($1.5bn), according to Reuters calculations using the company’s nine-month results, as sales jumped 20% to a record on strong sales of AI servers.
That marked a fifth quarter of profit growth and compared with a T$46.3bn LSEG consensus estimate from 14 analysts.
Foxconn’s shares have doubled so far in 2024, beating the broader market’s 28% gain, buoyed by its confident outlook on AI.
They closed down 1.4% on Thursday ahead of the earnings release.
Reuters
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