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Foxconn Forecasts Strong Revenue Growth Driven by AI Server Demand

Published: 3.20.2024

Foxconn, a key supplier for tech giant Apple, has revealed an optimistic outlook for the year, expecting a significant increase in revenue. This forecast is fueled by the surging demand for artificial intelligence (AI) servers, reflecting the company's robust performance in the fourth quarter of the previous year.

In the fourth quarter, Foxconn reported a remarkable 33% surge in net profit, exceeding market expectations. This positive momentum contrasts sharply with Chairman Young Liu's previous stance in November, where he expressed more conservative expectations for 2024.

"We see very strong demand for AI servers from our clients," Liu stated during an online earnings conference, projecting a revenue growth of over 40% for the AI server business in 2024. This optimism aligns with the anticipated 30% annual growth rate for the AI server market between 2023 and 2025, with Foxconn poised to grow in line with or even surpass this rate.

The company's strong performance in the fourth quarter was not limited to AI servers. Foxconn also reported better-than-expected sales in cloud and networking products, as well as smart consumer electronics. Notably, consumer electronics, including smartphones, accounted for 58% of the company's revenue in the quarter, while cloud and networking products contributed 20%.

Apple's recent success has also played a role in Foxconn's positive outlook, with the tech giant reporting sales and profit that exceeded Wall Street estimates. However, Apple's sales in China fell short of analysts' expectations.

Looking ahead, Foxconn anticipates healthy growth in 2024, although it cautioned that first-quarter revenue is expected to be lower compared to the same period last year. This decline is attributed to the surge in sales witnessed last year after pandemic restrictions were lifted in China.

Chief Financial Officer David Huang highlighted that Foxconn's capital expenditure in 2024 is expected to at least match the previous year's rate, driven by efforts to diversify investments globally. The company aims to expand into areas such as electric vehicles and semiconductors, reflecting its commitment to innovation and growth.

In 2023, Foxconn's capital expenditure increased by 14%, reaching approximately $3.6 billion. This investment growth underscores the company's strategic initiatives and its confidence in the future of the AI server market and other key sectors.

Foxconn's bullish outlook and strong performance signal a promising trajectory for the company in 2024, driven by the thriving demand for AI servers and its strategic expansion into new markets.

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