Foxconn Bets on AI Server Business for Reviving Revenue Outlook

Foxconn has revised its 2024 outlook from neutral to significant growth, with particular emphasis on the burgeoning demand for AI servers and components.
Foxconn at a trade showFoxconn, one of the key suppliers to Apple, has reported revenue of NT$6.162 trillion (down 7 percent) and net profit of NT$142.1 billion in 2023.

Foxconn Chairman Young Liu said in its earnings report: “We see very strong demand for AI servers from our clients. AI server business is expected to have revenue growth of more than 40 percent this year.”

The AI server market is likely to see 30 percent growth each year between 2023 and 2025, and Foxconn’s growth would be in line with that or even higher, Young Liu said, Reuters news report said.

Young Liu highlighted Foxconn’s shift from a neutral stance to anticipating significant growth, driven by the escalating demand for AI servers. Liu emphasized the doubling of annual growth in GPU modules and projected revenue from the AI server business to exceed 40 percent year-on-year, comprising more than 40 percent of the total server business.

Young Liu elaborated on the company’s competitiveness in AI servers, emphasizing vertical integration capabilities from components to complete systems, including data centers. He emphasized Foxconn’s unique position as the sole provider of comprehensive solutions for AI data centers, encompassing high-performance computing servers, storage, switches, power supply solutions, and advanced cooling technology.

In addition to robust demand for AI servers, Foxconn 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 percent of Foxconn’s revenue while cloud and networking products which include servers contributed 20 percent.

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

Foxconn’s 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.

In the fourth quarter of 2023, Foxconn reported revenue of NT$1.852 trillion, a 6 percent decrease from the same period last year. Net profit for the quarter recorded an impressive 33 percent growth, reaching NT$53.15 billion.

Foxconn’s capital expenditure climbed 14 percent in 2023 to around T$111.7 billion ($3.6 billion).

With Capex reaching NT$111.7 billion in 2023, representing a 14 percent increase, Foxconn anticipates continued growth in investment for 2024.