Terry Gou (郭台銘), the billionaire founder of iPhone assembler Hon Hai Precision Industry Co (鴻海精密), has finally reached a goal that had eluded him for about eight years.
Shares of Hon Hai, known as Foxconn Technology Group (富士康科技集團) internationally, on Monday closed at NT$200, a level Gou had pledged to achieve in 2016.
The Taipei-listed stock retreated 0.75 percent to close at NT$198.5 on a mild technical pullback yesterday, but it has surged 91.39 percent this year on investor enthusiasm for artificial intelligence (AI) servers and the potential of the latest Apple Inc products.
Photo: Bloomberg
While Gou stepped down as Hon Hai chairman in 2019 to unsuccessfully pursue Taiwan’s presidency, the price represents a landmark for the firm he started 50 years ago.
Annual general meetings in past years had featured shareholders asking Gou when his famous target would be attained. This year’s meeting demonstrated how the company has evolved in new fields including AI servers, which it expects to become its next NT$1 trillion (US$30.87 billion) business, and electric vehicles.
The robust performance this year of Hon Hai and Taiwanese tech peers also underscores the transformation of the country’s contract manufacturers from low-margin, commodity information technology products to higher value-added offerings.
“The AI wave lifts all boats,” said Xiadong Bao, a fund manager at Edmond de Rothschild Asset Management.
For Hon Hai, “the rally is mainly driven by the AI server ramp-up, further expansion into AI-related networking equipment and high expectations for a general server and PC recovery,” he said.
Hon Hai reported that its revenue last month grew 22 percent year-on-year to a record high for the May, and said it is likely to beat expectations for the second quarter, due to stronger-than-expected demand for AI servers.
Hon Hai’s dip in shares yesterday, pared a rally that has shown some signs of overheating. Hon Hai is trading at a record high valuation of 16 times estimated forward earnings compared with its five-year average of 10 times.
However, Bloomberg Intelligence analyst Steven Tseng (曾緒良) sees potential for the stock to keep climbing above NT$200.
There was a “turning point” in March for Hon Hai, with the market realizing its relationship with Nvidia Corp and importance in the AI supply chain, Tseng said.
Hon Hai Precision Industry Co (鴻海精密) yesterday said that its research institute has launched its first advanced artificial intelligence (AI) large language model (LLM) using traditional Chinese, with technology assistance from Nvidia Corp. Hon Hai, also known as Foxconn Technology Group (富士康科技集團), said the LLM, FoxBrain, is expected to improve its data analysis capabilities for smart manufacturing, and electric vehicle and smart city development. An LLM is a type of AI trained on vast amounts of text data and uses deep learning techniques, particularly neural networks, to process and generate language. They are essential for building and improving AI-powered servers. Nvidia provided assistance
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