Hon Hai Precision Industry Co (鴻海精密) predicts three-digit percentage growth for its artificial intelligence (AI) server business due to robust demand for AI products such as ChatGPT, chairman Young Liu (劉揚偉) said yesterday.
Hon Hai — known globally as Foxconn Technology Group (富士康科技集團) — is the world’s biggest contract electronics manufacturer and assembles devices for many international brands, most notably Apple Inc’s iPhone products.
It has also moved to diversify beyond electronics assembly, expanding into areas ranging from electric vehicles to semiconductors and servers.
Photo: CNA
“In 2022 alone, Hon Hai’s revenue for servers reached NT$1.1 trillion [US$35.75 billion] to obtain a 40 percent global market share,” Liu told an annual shareholders’ meeting in Taipei.
AI servers made up about 20 percent of the company's total server sales last year, Liu said, adding that Hon Hai had taken advantage of solutions provided by Intel Corp, Advanced Micro Devices Inc and ARM Ltd to roll out AI servers.
Hon Hai ranks first in global market share for mobile phones, PCs and servers, with the AI server market now “rising faster than everyone has expected,” Liu said.
He attributed the jump in demand to ChatGPT, the AI program that burst into the spotlight late last year with the ability to generate essays, poems and conversations from the briefest of prompts. Its runaway success has sparked a gold rush with billions of dollars of investment in the field.
“For the second half of this year, we may have three-digit growth, not two digits... We will continue to boost our market share for servers,” Liu said.
He said the company’s latest AI servers also use Nvidia Corp chips.
Nvidia is known for creating graphics chips long coveted by gamers, but which have become engines for the kind of complex processes involved in AI, known as accelerated computing.
Nvidia, cofounded by Taiwanese-American Jensen Huang (黃仁勳), surged to a market value of more than US$1 trillion on Tuesday after its quarterly earnings report last week blew past expectations.
Despite the rosy future for AI, Hon Hai maintains a “flat” outlook for this year, Liu said, after its first-quarter profit plunged 56 percent on weakened demand due to a global downturn.
“The global tightening monetary [policies], coupled with tense geopolitics and the significant uncertainty of inflation have a relatively large impact on the economic outlook,” he said.
Meanwhile, Hon Hai has started trial production of a third-generation silicon carbide (SiC) semiconductor for use in electric vehicles for five clients, Liu said, adding that a 6-inch SiC wafer plant in Hsinchu acquired from Macronix International Co (旺宏電子) in 2021 has begun commercial production.
According to Hon Young Semiconductor Corp (鴻揚半導體), a Hon Hai subsidiary, the Hsinchu plant will be upgraded to an 8-inch wafer plant by 2025 with an ultimate annual production capacity of up to 200,000 units.
At the meeting, Hon Hai shareholders approved a proposal to issue NT$5.3 in cash dividend per share based on the company's earnings per share of NT$10.21 last year.
The cash dividend, the highest since the company launched an initial public offering in 1991, represents a payout ratio of 52 percent and is the fourth consecutive year Hon Hai has maintained a payout ratio above 50 percent.
Additional reporting by CNA
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