Workers on the Foxconn factory campus in Longhua City, Shenzhen. 20JUL16 SCMP/Nora Tam (Photo by Nora Tam/South China Morning Post via Getty Images)
South China Morning Post | South China Morning Post | Getty Images
Apple Provider Foxconn has adopted a way more optimistic outlook for this 12 months, saying on Thursday that it expected a big increase in sales as a result of booming demand for artificial intelligence servers.
The positive tone comes after a better-than-forecast 33% rise in net profit for the fourth quarter. This also stands in stark contrast to Foxconn Chairman Young Liu’s comments in November that the world’s largest contract electronics manufacturer had “relatively conservative and neutral” expectations for 2024.
“We are seeing very strong demand from our customers for AI servers,” Liu said on a web based earnings call, adding that he expects the corporate to grow revenue by greater than 40% this 12 months.
The AI server market is predicted to grow by 30% every year between 2023 and 2025, and Foxconn’s growth would match or exceed that, he said.
The Taiwanese company’s net profit amounted to T$53.1 billion (US$1.7 billion) in October-December, significantly exceeding the LSEG SmartEstimate of T$43.5 billion. The 33% increase in profits was the strongest quarterly annual growth since March 2021.
In addition to robust demand for AI servers, the corporate also reported better-than-expected sales of cloud and networking products and smart consumer electronics.
Apple reported revenue and profit last month that beat Wall Street estimates, driven by growth in its iPhone business, although sales in China fell in need of analysts’ estimates.
In the fourth quarter, consumer electronics, including smartphones, accounted for 58% of Foxconn’s revenue, while cloud and networking products, which include servers, contributed 20%.
Despite expecting healthy growth in 2024, Foxconn warned that first-quarter revenue can be lower than in the identical period last 12 months, when sales rose after pandemic restrictions were lifted in China.
Chief Financial Officer David Huang also said capital spending growth in 2024 can be at the least in step with last 12 months’s rate, partly as a result of the corporate’s efforts to diversify investments globally and expand into areas comparable to electric vehicles and semiconductors.
Foxconn’s capital expenditure rose 14% to about T$111.7 billion (US$3.6 billion) in 2023.
