Foxconn sees robust AI server demand, delays EV target

Sign of Foxconn is seen at a glass door inside its office building in Taipei · Reuters

In This Article:

By Yimou Lee and Faith Hung

TAIPEI (Reuters) -Taiwan's Foxconn expects robust growth in its artificial intelligence server business next year and will increase investment in several countries amid mounting trade tensions between the U.S. and China, it said on Thursday.

U.S. President-elect Donald Trump has threatened to put a 10% tariff on all U.S. imports and a 60% levy on Chinese-made products, a move that could impact both Foxconn, whose Zhengzhou plant in China is a major iPhone assembly location, as well as its key client Apple.

The world's largest contract electronics maker has already been diversifying its supply chain, expanding production in India in particular. It said on Thursday it would continue to increase investment in countries including the United States, Mexico and Vietnam.

"Trump has just been elected. It's uncertain what policies he will implement ... we'll be watching to see what changes there will be from the new U.S government," Foxconn Chairman Young Liu told reporters after reporting its quarterly results.

He said its plants in Wisconsin and Texas have seen steady growth in sales on strong demand for AI servers, and the outlook for its U.S. operations is positive.

Foxconn, also a key supplier to Nvidia, kept its 2024 guidance of "significant" sales growth as robust sales increases in its AI server business helps it weather a decline in demand for consumer electronics caused by geopolitical and macro economic factors.

The company forecast AI servers would account for 50% of its total server revenue next year.

Citing Nvidia CEO Jensen Huang, Liu said demand for Nvidia's GB series servers were "very crazy" and its shipment for that product will grow quarter by quarter next year as it has ramped up production capacity.

Liu expected Foxconn to take "at least 40%" of the global AI server market and its cloud and networking business, which includes servers, would become its "major product" alongside smartphone.

It is currently building the world's largest manufacturing facility in Mexico for bundling Nvidia's GB200 superchips, a key component of the U.S. firm's next-generation Blackwell family computing platform.

Underscoring Foxconn's rosy prospects, October sales hit a record high for the month and the company, formally called Hon Hai Precision Industry, has said it expects fourth-quarter revenue to grow year-on-year.

It did not provide a numerical guidance.

LOWERING EV TARGET

Foxconn, which has been expanding into contract electric vehicle manufacturing for diversification, delayed its target of a 5% share in the global EV market by 2025 as the industry grapples with slowing demand.