Hon Hai Precision Industry Co (鴻海精密), a major iPhone assembler, yesterday reported net profit last quarter grew 91 percent to NT$42.1 billion (US$1.39 billion) from NT$22 billion a year earlier, driven by strong demand for cloud service and computer products.
Earnings per share were NT$3.03, up from NT$1.59 a year earlier, but down from NT$3.34 in the previous quarter. Gross margin last quarter decreased to 6.11 percent, from 6.32 percent a year earlier, while operating margin improved to 2.83 percent from 2.78 percent, the firm said.
First-quarter revenue reached NT$1.64 trillion, up 24 percent from a year earlier, but down 23 percent from the previous quarter — meeting the firm’s March forecast.
Photo: Bloomberg
While revenue from smart consumer products held steady, rather than posting a significant annual growth as expected, artificial intelligence (AI) server revenue last quarter rose more than 50 percent year-on-year, boosted by growing demand from major North American cloud service providers, but fell short of meeting its earlier target to double the figure from a year earlier, Hon Hai chairman Young Liu (劉揚偉) said.
“The main reason is that we began mass production of Nvidia Corp’s GB product lines at the end of the first quarter, but shipments are scheduled for the second quarter, so we expect server revenue to grow next quarter and reach double-digit growth,” Liu said.
The company is accelerating shipments of AI servers, and has developed and shipped several AI servers equipped with application-specific integrated circuits to customers, he said.
AI server revenue in the second quarter is expected to increase significantly, both quarterly and annually, and swell to about NT$1 trillion this year, he said.
Overall, sales this quarter from all business sectors are expected to increase over the previous year and prior quarter, he said.
However, Hon Hai is cautious about the business outlook going forward and has trimmed its full-year revenue outlook from “strong growth,” as stated in March, to “significant growth,” citing uncertainties from US President Donald Trump’s tariff and currency policies as well as a recent sharp appreciation of the New Taiwan dollar against the US dollar, Liu said.
Despite the tariff headwinds, Hon Hai planned its global deployment early, and the effect would be relatively limited, he said, adding that the company has set up 233 plants and offices in 24 countries, including 54 in the Americas, and 12 each in Europe and India, over the past five years.
Regarding its electric vehicle (EV) business, Hon Hai would begin mass production of its Model B vehicles in the second half of this year, while its EV battery plant in Kaohsiung began mass production last quarter to supply products for testing by customers, Liu said.
As for its semiconductor segment, Hon Hai’s silicon carbide (SiC) automotive chips would enter mass production in the second quarter, while its next-generation SiC metal-oxide-semiconductor field-effect transistors are expected to begin mass production in the second half of the year, he said.
In the aerospace sector, the company is continuing to develop drone production technologies and modules, he said.
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