Foxconn Third-Quarter Profit Surges 17% on AI Server Demand
Taipei – Foxconn, the world’s largest contract electronics manufacturer, reported a 17% increase in third-quarter profit compared to the same period last year, driven by strong demand for servers used in artificial intelligence applications.
The company, formally known as Hon Hai Precision Industry, announced today its net profit reached NT$57.67 billion (approximately $1.87 billion USD) for the quarter ending September 30, 2023, exceeding expectations of NT$50.41 billion. Revenue for the quarter totaled NT$2.06 trillion (approximately $66.29 billion USD). While best known for assembling Apple’s iPhones, Foxconn has been strategically diversifying into higher-margin businesses like AI infrastructure.
Foxconn’s growth is largely attributed to its expanding server manufacturing business, particularly its partnership with Nvidia, a leading AI chip designer. “Foxconn’s server manufacturing business is currently in a strong growth phase, underpinned by robust demand,” explained Ivan Lam, a senior analyst at Counterpoint Research. He added that the company is prioritizing securing orders in this lucrative sector, even if it means adjusting its focus within consumer electronics, a strategy he described as a clear case of “follow the cash.” This shift highlights the increasing importance of AI in the global technology supply chain and could reshape the competitive landscape. You can learn more about the growing AI market here.
Despite potential challenges from component price fluctuations and logistical hurdles, analysts anticipate continued favorable results for Foxconn in the fourth quarter. The company’s ability to capitalize on the AI boom positions it for sustained growth, as detailed in our recent report on Foxconn’s AI investments.
Company officials indicated they expect continued strong demand for AI-related products and services in the coming months.
Foxconn Chairman Young Liu delivers a speech during the Hon Hai Tech Day in Taipei on Oct. 18, 2023.
I-hwa Cheng | AFP | Getty Images
Foxconn, the world’s largest contract electronics maker, reported Wednesday that its third-quarter profit jumped 17% from a year earlier.
Here’s how Foxconn did in the September quarter compared with LSEG SmartEstimates, which are weighted toward forecasts from analysts who are more consistently accurate:
- Revenue: $2.06 trillion New Taiwan dollars ($66.29 billion) vs. NT$2.06 trillion expected
- Net profit: NT$57.67 billion vs. NT$50.41 billion
Foxconn, formally known as Hon Hai Precision Industry, is best known as the world’s largest manufacturer of Apple‘s iPhones, but has been shifting into other business avenues, including AI.
The firm manufactures server racks designed for AI workloads and has become a key partner to American AI chip darling Nvidia.
Foxconn’s server manufacturing business is currently in a strong growth phase, underpinned by robust demand, Ivan Lam, a senior analyst at Counterpoint Research, told CNBC.
The company is leveraging its dominance in contract manufacturing to secure both current and future orders, Lam said, describing it as a clear case of “follow the cash” — a strategy that naturally involves sacrificing some consumer electronics orders.
He added that Foxconn’s pivot toward high-growth server manufacturing “is clearly paying off,” even as it trades parts of its consumer electronics footprint for longer-term momentum.
While component price volatility, currency swings, and logistics challenges can pressure margins, Lam said he expects Foxconn’s fourth-quarter results to “remain favorable.”
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