Manufacturing giant Hon Hai Precision Industry Co (鴻海精密) yesterday posted its best third-quarter profit in the company’s history, backed by strong demand for artificial intelligence (AI) servers.
Net profit expanded 17 percent annually to NT$57.67 billion (US$1.86 billion) from NT$44.36 billion, the company said.
On a quarterly basis, net profit soared 30 percent from NT$44.36 billion, it said.
Photo courtesy of Hon Hai Precision Industry Co
Hon Hai, which is Apple Inc’s primary iPhone assembler and makes servers powered by Nvidia Corp’s AI accelerators, said earnings per share expanded to NT$4.15 from NT$3.55 a year earlier and NT$3.19 in the second quarter.
Gross margin improved to 6.35 percent, up from 6.19 percent a year earlier and 6.33 percent in the previous quarter, which the company attributed to better vertical integration of its products and a larger operational scale.
The growth momentum in AI servers is expected to extend into next year and the following two to three years, as the “major five” cloud service providers have raised their capital expenditure to about US$600 billion for next year, Hon Hai chairman Young Liu (劉揚偉) told investors yesterday.
“I am very optimistic about the development of the AI market next year. Our cooperation with clients and partners will be closer, and we expect to secure more orders by engaging in a wider range of AI projects,” Liu said. “Briefly, I am very positive about our outlook for 2026.”
Next year, the cloud and networking product business is expected to remain a key revenue pillar for the company, while its smartphone and PC businesses are also likely to benefit from an upgrade trend driven by the adoption of AI and edge computing in end devices, he said.
The company’s Model B electric vehicles (EVs) have entered mass production for overseas and domestic markets, and revenue from the segment is also expected to continue rising next year, Liu said.
Mass production for the EV models is slated for the first quarter of next year, he said.
Last quarter, the cloud and networking product business accounted for 42 percent of Hon Hai’s overall revenue of NT$2.06 trillion, up from 32 percent in the third quarter last year. Smartphones made up 37 percent, shrinking from 45 percent a year earlier.
This quarter, Hon Hai’s cloud and networking product business is expected to post strong quarterly and annual growth, as next-generation AI servers have entered mass production, Liu said.
During the first three quarters of this year, AI server revenue reached NT$1 trillion.
This quarter’s AI server revenue would improve from last quarter, with the growth momentum projected to persist until next year, Liu said.
Meanwhile, AI server rack shipments last quarter grew 300 percent and are expected to rise by a high double-digit percentage this quarter, Hon Hai said.
However, the computing business is to see a significant decline in revenue this quarter compared with the same period last year due to milder PC demand and exchange rate fluctuations, Liu said, adding that a mild decline from last quarter is also expected.
Revenue from the component and other products business — which includes connectors, camera modules and auto parts — is expected to show little change from the same period last year, but is expected to record significant growth from the previous quarter, he added.
Overall, Hon Hai expects to post significant revenue growth this year, driven by booming AI technology development, Liu said.
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