Foxconn’s August revenue surges 33% on strong AI demand

SINGAPORE: Hon Hai Precision Industry Co, also known as Foxconn, reported a significant boost in its August revenue, driven by increasing demand for servers powering artificial intelligence (AI) applications.

Bloomberg reported that the company, recognised as Apple’s primary manufacturing partner, saw its sales rise to NT$548.3 billion (S$22.3 billion) for the month, marking a 33 per cent increase from the previous year. This followed a 22 per cent increase seen in July.

The company’s revenue has started to recover after a slump in the smartphone market.

Foxconn’s recovery has largely been supported by its business in supplying servers to data centre operators, particularly those containing Nvidia’s AI accelerators.

Last month, the company said it expected revenue growth to continue for the rest of the year, reversing the decline in recent quarters. Its stock price has surged nearly 70 per cent in 2024.

However, some investors remain cautious. Concerns have surfaced after Nvidia’s recent earnings report, which failed to meet market expectations. This led to a significant sell-off in its stock. Analysts have warned that the full potential of AI has yet to be tested and proven.

Bloomberg Intelligence analysts Steven Tseng and Sean Chen explained that Nvidia’s announcement about increasing production of its next-generation AI GPU platform, Blackwell, in late 2024, helps clear up doubts about the growth of the AI server supply chain next year.

They noted that while the new chips will have “limited contribution” this year, major manufacturers like Hon Hai, Quanta, and Wiwynn are expected to see significant growth in AI server sales. This is largely due to strong shipments of systems using Nvidia’s current Hopper chips during the second half of 2024.

Foxconn has set ambitious goals, aiming to secure 40 per cent of the global AI server market. The company is leaning on its close ties with major tech firms and its own manufacturing capabilities to meet this target.

The Taiwanese company is also seeing benefits from strong demand for consumer electronics. The introduction of AI features and improvements could prompt mobile users to upgrade their devices. iPhone shipments in China have recently picked up again, and the global smartphone market is showing signs of recovery. Apple is also set to launch the iPhone 16 next week.

Foxconn said in a statement, “Entering the peak season in the second half of the year, we anticipate our operation to gradually gain momentum.” /TISG

Read also: Hon Hai aka Foxconn big jump in shares after bullish AI sales outlook

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