Foxconn Reports 33% Profit Surge On Booming Demand For AI Servers

Taiwanese tech giant Foxconn – also known as Hon Hai Precision Industry – reported the second consecutive quarter of profit growth driven by a surge in demand for artificial intelligence servers. 

For the quarter ending December, Foxconn reported a 33% jump in net profit to NT$53.2 billion ($1.7 billion). That beat the average analysts surveyed by Bloomberg, who expected around NT$43.8 billion. 

Here’s a snapshot of the fourth quarter earnings (courtesy of Bloomberg):

Net income NT$53.15 billion, +33% y/y, estimate NT$43.81 billion (Bloomberg Consensus)

Operating profit NT$48.93 billion, +11% y/y, estimate NT$51.74 billion

EPS NT$3.83 vs. NT$2.88 y/y, estimate NT$3.18

Revenue NT$1.85 trillion, -5.5% y/y, estimate NT$1.83 trillion

2023 fiscal year results:

Net income NT$142.10 billion, estimate NT$132.63 billion

Operating profit NT$166.53 billion, estimate NT$168 billion

EPS NT$10.25, estimate NT$9.51

Revenue NT$6.16 trillion, estimate NT$6.14 trillion

“We see very strong demand for AI servers from our clients,” Foxconn Chairman Young Liu told investors during an earnings call earlier today. Thanks to the AI frenzy, he expects revenue growth of more than 40% this year. 

Liu added that AI server market growth could average around 30% between 2023-25, with Foxconn’s growth projected to match or exceed this rate.  

According to the tech blog DIGITIMES Asia, Foxconn was rumored to have secured a major deal from longtime US partner Hewlett Packard Enterprise Co, which would further boost its AI server business. 

For the current quarter, Foxconn forecasts that sales will decline again as the Covid mania normalizes. AI sales are helping the company improve profit while experiencing a downturn in global iPhone demand (read: here and here). The company is the largest manufacturer of Apple devices. 

“The business saw a good sequential rebound into Q4 partly driven by the AI-focused side, but if you take a step back and look at 2023 as a whole, it was a relatively weak year,” Bloomberg Intelligence analyst Robert Lea said, adding, “The company should have a much better year as their main customers start to rebuild inventory.”

Foxconn shares trading in Taiwan have jumped in recent sessions towards record highs on optimism about AI orders.

How long will the AI boom last?