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Foxconn Reports 72% Profit Surge, AI Servers Drive Growth

Published by MEXEM EUROPE

May 15, 2024 10:16 AM
(GMT+2)

Significant Q1 Profit Surge
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Foxconn {{ m-tag option="price" ticker="2354.TW" currency="TWD" }} the world's largest contract electronics manufacturer and a major Apple {{ m-tag option="price" ticker="AAPL" currency="USD" }}supplier has reported a remarkable 72% increase in its first-quarter profit. This surge is attributed to robust demand for artificial intelligence (AI) servers and a low-profit base from the previous year.
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Quarterly Financial Performance
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  • For the January-March quarter, Foxconn's net profit rose to T$22.01 billion ($679 million), up from T$12.8 billion during the same period in the prior year.
  • This substantial increase follows a significant T$17.3 billion writedown in the previous year related to Foxconn's 34% stake in Japanese electronics maker Sharp Corp.
  • Despite the impressive growth, the profit figures fell short of analysts' forecast of T$29.31 billion, indicating the lingering effects of the writedown on the company's financial performance.
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Revenue Breakdown
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Foxconn's first-quarter revenue was diversified across various product categories. Consumer electronics, including smartphones, comprised 48% of the total revenue, while cloud and networking products, such as servers, accounted for 28%. The company anticipates significant revenue growth in the second quarter, which is consistent with previous guidance. However, it expects revenue from innovative computer electronics to remain flat, indicating a balanced revenue stream and potential for growth in the coming quarters.
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AI Server Demand Outlook
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In March, Foxconn, officially known as Hon Hai Precision Industry Co Ltd, projected a substantial annual revenue growth fueled by increasing demand for AI servers. This optimistic outlook aligns with Apple's recent performance, where the tech giant exceeded modest expectations, and its CEO Tim Cook predicted revenue growth in the current quarter.
Foxconn's shares have surged by 65% this year, outperforming the broader market's 17% gain, mainly due to its positive AI outlook.

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