iPhone manufacturer Foxconn beats Street estimates in Q4; Net profit climbs 33% YoY on strong AI demand

The world’s largest contract electronics maker’s Q4 net profit is the strongest YoY growth logged for a quarter since March 2021, according to news agency Reuters. Hon Hai Precision Industry Co — better known as Foxconn internationally, reported lucrative AI hardware sales helped offset weakness in iPhone and electronics demand in the quarter-under-review. 

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Foxconn also had better-than-expected sales of cloud and networking products and smart consumer electronics. In the fourth quarter, consumer electronics including smartphones accounted for 58 per cent of Foxconn’s revenue while cloud and networking products which include servers contributed 20 per cent.

Shares of Foxconn are up more than 15 per cent this year, buoyed by growing optimism about the firm’s opportunity to benefit from demand for AI servers and hardware. Earlier this week, JPMorgan said that Foxconn’s rally could extend as the market is betting increasingly on the company’s prospects in AI server infrastructure from the second half of the year. 

Analysts estimate that Hon Hai’s AI revenue and gross profit exposure is likely to be in the 10-12 per cent range in 2025. This month, Foxconn was reported to have secured a major order from its longtime US partner Hewlett Packard Enterprise, according to a report by Bloomberg.

Also Read: Foxconn CEO Young Liu gets Padma Bhushan; key facts about the 66-year-old visionary

‘’The AI server market was likely to see 30 per cent growth each year between 2023 and 2025, and Foxconn’s growth would be in line with that or even higher,” Foxconn Chairman Young Liu said in November 2023.

Although it expects healthy growth over 2024, Foxconn cautioned that the first-quarter revenue is set to come in lower than the same period a year ago when sales surged after pandemic restrictions were lifted in China.

Chief Financial Officer David Huang also said that 2024 growth in capital expenditure would at least match last year’s rate, partly due to the company’s drive to diversify investment around the world and expand into areas such as electric vehicles and semiconductors.

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Published: 14 Mar 2024, 06:55 PM IST