Business Essentials for Professionals


Apple Supplier Foxconn Is Optimistic About 2024 And Notes A Significant Demand For AI Servers

Apple Supplier Foxconn Is Optimistic About 2024 And Notes A Significant Demand For AI Servers
Foxconn, the Apple supplier and contract manufacturer, announced on Thursday that it anticipated a sharp increase in income this year due to the surge in demand for artificial intelligence servers. This is a significantly more optimistic outlook than it had previously held.
The optimistic outlook follows a 33% increase in net earnings for the fourth quarter that exceeded expectations. In November, Foxconn Chairman Young Liu stated that the company, which is the largest contract electronics producer in the world, had "relatively conservative and neutral" expectations for 2024. This statement contrasts dramatically with Liu's words.
"We see very strong demand for AI servers from our clients," Liu stated during an online results call, expressing his expectation for a revenue rise of over 40% for the company this year.
He predicted that Foxconn's growth will be at least as strong as the projected 30% annual growth rate for the AI server industry between 2023 and 2025.
The Taiwanese company's net profit from October to December was T$53.1 billion ($1.7 billion), easily exceeding an LSEG SmartEstimate of T$43.5 billion. The highest quarterly year-over-year gain recorded since March 2021 was the 33% increase in profit.
It had better-than-expected sales of cloud and networking devices as well as smart consumer gadgets, in addition to a strong demand for AI servers.
Despite its China sales falling short of analysts' projections, Apple last month announced sales and profits that exceeded Wall Street predictions, driven by growth in its iPhone division.
Consumer electronics, which included smartphones, made up 58% of Foxconn's revenue in the fourth quarter. Cloud and networking goods, which included servers, contributed 20%.
Foxconn issued a warning, stating that although it anticipates strong growth through 2024, first-quarter revenue is expected to be lower than it was a year before, when sales spiked following the lifting of pandemic restrictions in China.
Chief Financial Officer David Huang added that the company's efforts to diversify its investments globally and enter new markets, such electric vehicles and semiconductors, would help ensure that capital expenditure growth in 2024 would at least match that of the previous year.
The capital expenditures of Foxconn increased by 14% in 2023 to around T$111.7 billion ($3.6 billion).

Christopher J. Mitchell

Markets | Companies | M&A | Innovation | People | Management | Lifestyle | World | Misc