(Bloomberg) — Hon Hai Precision Industry Co. reported strong profit growth for the second consecutive quarter, as favorable AI hardware sales offset weak demand for iPhones and electronics.
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Apple Inc.’s world’s largest assembler of iPhones posted a 33% jump in net profit to NT$53.2 billion ($1.7 billion) in the quarter ended December.
The company’s stock has risen more than 15% this year, helped by growing optimism that Foxconn has a chance to benefit from demand for artificial intelligence servers and hardware. The Taiwanese assembler was not among the first group of companies boosted by the AI frenzy over the past year, but investors and analysts believe the company will increase its share of such businesses. I think there is a high possibility that it will. This month, it was reported that the company had won a major order from long-time US partner Hewlett Packard Enterprise.
Hon Hai had expected sales to decline again this quarter as the company is coming off a comparative rise from the post-pandemic recovery period early last year. AI sales helped Foxconn improve profits while weathering a slump in its flagship product, the iPhone, which first brought it global fame.
JPMorgan said earlier this week that Foxconn’s bull run could be prolonged as the market increasingly bets on the company’s prospects in AI server infrastructure starting in the second half of this year. Analysts including Gokul Hariharan estimate that Hon Hai’s AI sales and gross profit exposure are likely to be in the 10-12% range in 2025.
Still, challenges remain as Apple accounts for more than half of Hon Hai’s sales. Counterpoint Research announced this month that iPhone sales in China fell an astonishing 24% in the first six weeks of this year. To stimulate demand, Apple even rolled out rare discounts on its web store in January, with online resellers currently offering discounts of up to $180.
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