Apple Supplier Foxconn Anticipates Strong Growth in 2024, Fueled by Demand for AI Servers

Foxconn, a major supplier for Apple, has expressed a more optimistic outlook for the year ahead. The company announced on Thursday that it expects a significant increase in revenue, driven by the booming demand for artificial intelligence (AI) servers.

This positive sentiment follows a remarkable 33% surge in net profit for the fourth quarter, surpassing expectations. It is a stark contrast to Foxconn Chairman Young Liu's previous remarks in November, where he described the company's expectations for 2024 as "relatively conservative and neutral."

Liu stated during an online earnings conference that there is a strong demand for AI servers from their clients. He further projected that the business would experience revenue growth of over 40% this year. He also highlighted that the AI server market is expected to grow by 30% annually between 2023 and 2025, and Foxconn's growth is anticipated to align with or even exceed this projection.

In the October-December period, Foxconn achieved a net profit of T$53.1 billion ($1.7 billion), surpassing the T$43.5 billion LSEG SmartEstimate. This 33% surge in profit marks the highest year-on-year growth for a quarter since March 2021.

Apart from the strong demand for AI servers, Foxconn also experienced better-than-expected sales in cloud and networking products, as well as smart consumer electronics.

While Apple recently reported sales and profit that exceeded Wall Street estimates, with significant growth in its iPhone business, Foxconn's revenue in the fourth quarter was primarily driven by consumer electronics, including smartphones, accounting for 58% of their total revenue. Cloud and networking products, which include servers, contributed 20%.

Despite the positive outlook for 2024, Foxconn cautioned that first-quarter revenue is expected to be lower compared to the same period last year. This is due to the surge in sales experienced after pandemic restrictions were lifted in China.

Chief Financial Officer David Huang also mentioned that the company's capital expenditure growth in 2024 would at least match the rate of the previous year. This is partly attributed to Foxconn's efforts to diversify its investments globally and expand into areas such as electric vehicles and semiconductors.

In 2023, Foxconn's capital expenditure increased by 14% to approximately T$111.7 billion ($3.6 billion).

Source: REUTERS