Apple supplier Foxconn sees revenue rising as AI server demand nudges profit up

02:38

Apple supplier Foxconn to build ‘AI factories’ using US hardware leader Nvidia’s chips and software

Apple supplier Foxconn to build ‘AI factories’ using US hardware leader Nvidia’s chips and software

Shares of the world’s largest electronics contract manufacturer are up close to 80 per cent this year, as investors have bought into the AI pitch.

“Given the global increase in AI applications, AI servers are likely to become Hon Hai’s key growth engine given its strong partnership with Nvidia,” Bloomberg Intelligence analyst Cecilia Chan said.

“Its robust logistics and manufacturing capability could keep its iPhone assembly share above 50 per cent even as Apple diversifies suppliers, but further ratings upgrade may be capped by low single-digit margins.”

Foxconn, much like TSMC, benefits from any upsurge in consumer electronics demand, and the addition of AI features and enhancements is widely seen as a catalyst driving users to upgrade their devices.

Foxconn’s July sales jumped 22 per cent, thanks to AI server sales, and the company’s Wednesday report indicated it expects growth across most of its business segments in the current quarter.

The company expects strong growth from its cloud, networking and components groups, while smart electronics – iPhones included – are set to be roughly flat for the full year.