Foxconn Sees Huge Demand For AI Servers In 2024, Citing Apple Supplier

(CTN News) – Foxconn (2317.TW), the company that supplies Apple (AAPL.O), has adopted a much more bullish outlook for this year, saying that it expects to see a significant increase in revenue as a result of booming demand for the company’s artificial intelligence servers.

As part of the upbeat tone, the company is celebrating a 33% jump in net profit for the fourth quarter, exceeding forecasts by a wide margin. Furthermore, it contrasts sharply with Foxconn Chairman Young Liu’s statements in November, where he said that the world’s largest contract electronics maker had “relatively conservative and neutral” expectations for the year 2024.

“In terms of AI servers, we see a very strong demand from both internal and external clients,” Liu said during an online earnings conference, adding that the company expects to have more than 40% revenue growth this year as a result of the increased demand.

Foxconn’s growth is likely to be comparable or even higher than that of the AI server market which is expected to see 30% growth each year between 2023 and 2025, according to the company.

The net profit for the Taiwanese company for the period October-December came in at T$53.1 billion ($1.7 billion), which was very impressive in comparison with the LSEG SmartEstimate of T$43.5 billion. Compared to a year ago, the 33% increase in profit was the strongest growth logged by a company for a quarter since March 2021, the company said.

The company also had sales of cloud and networking products, along with smart consumer electronics, that were better than expected, despite the robust demand for AI servers.

As reported by Wall Street analysts last month, Apple reported an increase in sales and profits last month, boosted by the growth of its iPhone business. However, the company’s China sales didn’t meet the expectations of analysts.

Foxconn was able to generate 58% of its revenue in the fourth quarter from consumer electronics, including smartphones, while cloud and networking products, including servers,

Accounted for 20% of Foxconn’s revenue.

It is Foxconn’s intention, however, to caution investors that despite its expectation of sustainable growth in the years ahead, it believes first-quarter revenue will be lower than the same period a year ago when sales surged following the lifting of pandemic restrictions in China.

David Huang, the company’s chief financial officer, said that to date there has been no indication that the company will not expand into areas such as electric vehicles and semiconductors in 2024, which is partly due to its drive to diversify investments around the world and diversify into areas such as electric vehicles and semiconductors.

During the year 2023, Foxconn’s capital expenditures increased by 14% to around T$111.7 billion ($3.6 billion).

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