IPhone maker Hon Hai sustains revenue rebound with help from AI

Hon Hai Precision Industry’s revenue growth accelerated last quarter, sustaining a bounce-back as demand for the servers that drive artificial intelligence (AI) development offset weak smartphone sales.

Apple’s main manufacturing partner, also known as Foxconn, reported sales rose 20.2 per cent to NT$1.85 trillion (S$75 billion) for the three months ended September from a year earlier. That compares with the average analyst projection of NT$1.78 trillion compiled by Bloomberg.

The company said the third-quarter sales figure was a record for that period and exceeded its own expectations for growth, without specifying the estimate. Sales increased 19 per cent in the June quarter, the Taiwanese company’s first revenue gain since early 2023.

Foxconn’s sales is helped by a growing business supplying servers containing Nvidia’s AI chips. In August, it said it expected revenue to grow for the rest of the year. The company’s shares are up more than 85 per cent in 2024.

Hon Hai and other hardware suppliers are riding a wave of spending on servers and data centres from big tech firms including Meta Platforms and Alphabet’s Google. But questions are bubbling up about how long the spending will last without a home run AI application that can bring the tech firms a return on the massive infrastructure investment.

As the world’s biggest assembler of the iPhone, the Taiwanese company’s business still remains closely tied with Apple’s. In the second quarter, about 40 per cent of Foxconn’s revenue was still from the Smart Consumer Electronics category including the iPhone, while Cloud and Networking Products including AI servers, contributed to about 32 per cent.

Investors had anticipated a rebound in smartphone demand in 2024, though some analysts warn initial signs suggest the latest iPhone hasn’t spurred as much demand as expected. BLOOMBERG