Taiwanese tech giant, Hon Hai Precision Industry Co., has reported a significant surge in revenue for the third quarter, driven primarily by robust demand for artificial intelligence (AI) servers. The company, also known as Foxconn, saw its sales jump 20.2% to NT$1.85 trillion ($57.9 billion), exceeding market expectations and setting a new record for the period.
The growth is attributed to Foxconn’s expanding business in supplying servers equipped with Nvidia Corp.’s AI chips, which has become a key driver of the company’s revenue. This trend is expected to continue, with Bloomberg Intelligence predicting accelerated sales growth in 2024-25 as AI adoption becomes more widespread.
Despite a slowdown in global smartphone sales, Foxconn’s diversified product portfolio has helped mitigate the impact. The company’s shares have rallied over 85% this year, buoyed by its strong performance.
As a leading manufacturer of Apple’s iPhones, Foxconn’s fortunes are still closely tied to those of the tech giant. However, the company’s growing presence in the cloud and networking products segment, which includes AI servers, has reduced its dependence on smartphone sales.
Industry experts warn that the current boom in server and data center spending may not be sustainable without a breakthrough AI application that can deliver a significant return on investment for tech firms. Nevertheless, Foxconn’s vertical integration and global footprint position it well to capitalize on the growing demand for AI infrastructure.
The company’s electric vehicle contract manufacturing business, on the other hand, is expected to remain sluggish due to softening global demand. However, Foxconn’s strong performance in other segments is likely to offset this weakness, driving overall growth in the coming quarters.
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