Foxconn, the world’s largest contract electronics maker reported better-than-expected third quarter financials on firm demand for AI servers.
The Taiwanese firm saw a 14% rise in quarterly profit driven by strong demand for AI. servers. This comes on the back of a record third-quarter revenue as the company, last month, indicated quarterly revenue jumped 20% on strong sales of AI servers.
Foxconn expressed uncertainty at Trump 2.0
Net profit for July-September for Apple’s top iPhone assembler came in at $1.5 billion according to Reuters calculations.
Foxconn said it expects 2025 to be the “year of AI.” As a result, the company said it has already been diversifying its supply chain, expanding production in India in particular. The company also said, it would continue to increase investment in other countries including the US, Mexico, and Vietnam.
This, the company indicated is to enable it to diversify risk following the re-election of US President Donald Trump into the White House.
Foxconn chairman Young Liu told reporters after reporting its quarterly results of the uncertainties with Trump 2.0.
“Trump has just been elected. It’s uncertain what policies he will implement… we will be watching to see what changes there will be from the new US government.”
Liu.
The President-elect has threatened to put a 10% tariff on all US imports and a 60% levy on Chinese-made products, a move that could impact both Foxconn and its key client Apple, as its Zhengzhou plant in China is a major iPhone assembly location.
Liu said Foxconn plants in Wisconsin and Texas have seen steady growth in sales on strong demand for AI servers and the outlook for its US operations is positive.
Foxconn expects AI servers to remain solid in the outlook
Foxconn forecasts that AI servers will account for 50% of its total server revenue next year. Lui said, citing Nvidia CEO Jensen Huang: “Demand for Nvidia’s servers is very crazy and its shipment for that product will grow quarter by quarter next year as it has ramped up production capacity.”
He expects the Taiwanese firm to have at least a 40% market share of the global AI server market and its cloud and networking business which encompasses servers being a major product alongside smartphone.
Foxconn which has been expanding into contract electric vehicle (EV) manufacturing for diversification, delayed its target of a 5% share in the global EV market by 2025 as the market seems to be slowing down.
The company expects to secure orders from traditional automakers in the near term and is currently working to finalize an EV partnership with two Japanese automakers.
The company however still believes AI is the best bet, as the CEO in October in a TV interview with CNBC said, “AI still has some time to go”. This came as advanced language models from the likes of OpenAI are becoming increasingly intelligent with each new iteration that comes out.
According to Liu, AI is gravitating towards a form that is as intelligent if not more intelligent than humans. This type of AI is referred to in the industry as “AGI” or Artificial General Intelligence. Foxconn thinks the intelligence issue is a four layer building and we are currently in layer two.
This comes after OpenAI which released the latest GPT-4o model said that it had raised $6.6 billion at a $157 billion valuation. The company said it is working on developing GPT-5, its next-generation LLM.
Foxconn said news on increasingly intelligent AI is only good for the AI servers industry, which has been vital for the company.
“I think for the AI server industry, I think we still have some time to grow.”
Liu.
“With the AGI capability growing, the age of AI devices will be another industry we should watch carefully,” added Liu.
As a result, Foxconn shares have doubled so far in 2024, beating the broader market’s 18% gain buoyed by its confident outlook on AI.
