Hon Hai Precision Industry Co (鴻海精密) yesterday reported a 29.68 percent year-on-year rise in quarterly sales, a sign of sustained artificial intelligence (AI) demand during the first weeks of war in the Middle East.
Revenue for the first quarter grew to NT$2.13 trillion (US$66.6 billion), while analysts on average were looking for NT$2.14 trillion.
On a quarterly basis, revenue fell 18.18 percent, said Hon Hai, known internationally as Foxconn Technology Group (富士康科技集團).
Photo: Daniel Ceng, AP
Concerns about a rush to build power-guzzling data centers are growing in the face of escalating conflict in the Middle East, which is putting pressure on global shipping routes and gas prices.
“Hon Hai — the world’s largest electronics manufacturer — will likely strengthen its sales growth this year as AI server rack shipments continue to expand,” Bloomberg Intelligence analysts Steven Tseng (曾緒良) and Rebecca Wang said in a note.
“The Taiwanese company’s deep vertical integration and global presence offer an edge amid increasing server complexity and demand for localized production. Further upside is possible from a surge in ASIC-based server projects, followed by the [Nvidia Corp’s] Vera Rubin platform deployment” in the second half of the year, they said.
Hon Hai last month projected strong sales growth this year, fueled by sustained AI momentum.
However, chairman Young Liu (劉揚偉) warned about uncertainty around the business environment stemming from the Middle East crisis.
Sales in the current quarter are expected to continue to grow quarter-on-quarter and year-on-year, although “it remains necessary to monitor the impact of the volatile global political and economic situation,” Hon Hai said in a statement on yesterday.
Hon Hai has established itself as a key AI hardware player by assembling servers that house Nvidia accelerators. That is as Alphabet Inc, Amazon.com Inc, Meta Platforms Inc and Microsoft Corp are earmarking about US$650 billion on AI spending this year, even while warnings about overcapacity and questions about how to monetize the technology linger.
The Taiwanese company also derives a large portion of revenue from assembling Apple Inc’s iPhones and MacBooks, and is in position to benefit from a strong reception for the latest iPhone 17.
Like many other electronics manufacturers, Hon Hai’s profitability has been facing growing challenges from an extended shortage of memory chips used in a wide range of products from smartphones to PCs and servers, although executives have said the crunch should not significantly impact demand for premium handset and computer products the company makes for major customers.
Separately, Hon Hai on Wednesday last week said it appointed Michael Chiang (蔣集恆) to succeed Kathy Yang (楊秋瑾) as the new rotating chief executive officer, while continuing to lead the group’s business operation related to smart consumer electronics.
The appointment took effect immediately, it added.
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