Taiwan’s Foxconn (2317.TW), the world’s largest contract electronics manufacturer, reported record fourth-quarter revenue, driven by robust demand for artificial intelligence (AI) servers. Net profit for the October-December period surged 33% to T$53.1 trillion ($1.7 billion), surpassing the T$43.36 trillion LSEG Smart Estimate and marking the strongest quarterly earnings growth since March 2021. During an investor conference call, Chief Financial Officer David Huang projected the AI server market to expand by 30% annually from 2023 to 2025. This growth, along with strong demand for smartphones, cloud, and networking products, boosted both operating income and consolidated operating profit.
The company, which builds products like iPhones and iPads for companies such as Apple Inc (AAPL.O) and Hewlett-Packard Co, has been under pressure from workers demanding higher pay in recent years. It is also attempting to diversify its business beyond electronics production. Last year, it bought a significant stake in China’s Geely Auto, the country’s biggest private carmaker, and plans to produce electric vehicles for various companies.
In the past, Foxconn has a history of making big investment promises that often fail to materialize. It burned Wisconsin by promising to build a massive LCD factory in the state, then moved to downsize that facility and buy buildings for “innovation centers” around the state as part of its promised “AI 8K+5G ecosystem.”
However, despite the challenges it faces, Foxconn is expected to report another record-breaking quarter when it reports full results on Nov. 14. Its annual Tech Day, scheduled for Oct. 8-9, is where the company normally announces new partnerships and projects.
In addition to producing iPhones, Foxconn is the world’s biggest contract manufacturer of televisions, tablets, PCs, and laptops. Its factories in China are famous for their Industrial Revolution-style approach to manufacturing, where employees live, work, and eat on-site and work round-the-clock shifts. Many of the workforce are migrants, and the company has been criticized for its treatment of workers.
Rising global trade tensions and a tech war between the US and China have also pressured Foxconn to expand production outside China. President Donald Trump has threatened to impose additional tariffs on Chinese goods, which could prompt the company to look for other markets. It has already diversified its investment abroad. Chiu Shih-fang, a senior analyst at the Institute of Economic Research in Taipei, said it might invest even more outside China in 2024. She added that that would help offset any disruption from a US-China tech war. She also expects the company to increase its investment in high-growth areas such as electric vehicles and semiconductors.