Foxconn’s Q3 profit soars on AI server demand, sees 2025 as ‘AI Year’ for group

Foxconn Technology’s (OTCPK:FXCOF) third quarter revenue jumped 20% year-over-year, and the company sees 2025 as “AI Year” for the group.

Q3 Metrics: The Apple (AAPL) supplier — which is formally known as Hon Hai Precision (OTCPK:HNHAF) (OTCPK:HNHPF) — said net profit (attributable to the owners of the parent company) soared 14% year-over-year to NT$49.3B. The numbers surpassed analysts’ estimate of NT$45.7B, according to a report from Bloomberg News.

Revenue for the June to September quarter rose 20% year-over-year to NT$1.85T, amid demand for AI servers.

Foxconn said cumulative revenue of AI servers in the first three quarters of 2024 surged over 200% compared to the same period last year, and general server revenue also grew by more than 20%. Compared with the same period last year, strong growth will be seen in the fourth quarter, the company added.

Nvidia (NVDA) is among the Taiwan-based company’s prominent customers.

Last month, Foxconn announced that it is building the world’s largest manufacturing facility for Nvidia’s (NVDA) GB200 chips to meet the high demand.

The company reaffirmed on Thursday that it has begun to set up the super computing center and would soon become a major manufacturing factory with AI super computing capabilities.

In addition, Hon Hai said it continues to invest in GenAI on the manufacturing side, and its Smart Manufacturing has increased revenue per employee by over 80%, and, including AI, robotics, and automation, is collaborating with several major international partners.

For the third quarter, revenue, gross profit, operating profit, net profit, and EPS all set new highs for the third quarter, according to Hon Hai.

Foxconn’s CFO David Huang said that although margins in the third quarter were affected by the product mix, due to the competitive advantage of the company’s operating scale, the absolute amount of gross profit, operating profit and net profit all grew year-over-year.

Outlook:

Q4: Foxconn reiterated growth prospects for the fourth quarter, noting that operations will gradually ramp up, and there is expected to be significant quarterly and annual growth.

Besides the traditional peak season, the well-performing smart consumer electronics product segment is expected to show strong quarter-on-quarter growth, according to the company. Foxconn added that in terms of cloud and networking products, the demand for AI servers is strong.

Full year 2024: The company said that due to strong demand for AI servers, the 2024 outlook for significant growth remains unchanged but the visibility is better than in August.

Among the main products, the growth of cloud and networking products is even stronger, while components and other products are also performing strongly, according to Hon Hai.

For computing products, the full-year outlook was raised to significant growth due to the effects of new products, the company noted.

Year 2025: Foxconn’s Chairman Young Liu laid out AI, Smart Manufacturing, Smart EV, Smart City and semiconductors as five major operating pillars for 2025.

Liu predicted that 2025 will be the “AI Year” for the group and noted that AI will be the most important growth driver for the company.

He sees the international political and economic situation, monetary policy and the development of the AI industry as the most important influencing factors next year.

Foxconn said that in 2025, shipment volume of AI servers is expected to grow quarter by quarter, accounting for more than 50% of overall server revenue, becoming the most important driver for the company’s growth.

Based on current trends, the AI server market can continue to develop rapidly in the next few years, Liu noted.

US elections’ impact:

Foxconn said that its outlook in America is very positive. Liu said that the company is not concerned about the election itself, but is looking at factors such as investment policy, environment and business opportunities.

Hon Hai noted that it has nearly 50 factories in the U.S., and employs more than 5,000 people.

In the long run, the company’s factories in Wisconsin and Texas will benefit in the fields of AI and servers, while the electric vehicle factory in Ohio will continue to introduce new customers, Hon Hai added.

Foxconn noted that it also announced new investments in the U.S. a few months ago.