Hon Hai Precision Industry Co (鴻海精密), a major iPhone assembler and supplier of artificial intelligence (AI) servers powered by Nvidia Corp’s chips, yesterday posted an annual decline in revenue of 9.6 percent for last quarter due to lower smartphone shipments, matching a company estimate last month.
Revenue dropped to NT$1.32 trillion (US$41.18 billion) last quarter, compared with NT$1.46 trillion in the first three months of last year.
On a quarterly basis, revenue plunged about 28.65 percent in the traditionally slack season.
Photo: Ann Wang, Reuters
The performance was “in line with the company’s outlook [given] at the earnings conference,” Hon Hai said in a statement.
The company attributed the declines to a higher base in the prior year as smartphone production and shipments were postponed to the first quarter of last year from the final quarter of 2022 after a surge of COVID-19 cases in China temporarily halted operation of its Zhengzhou factory, an iPhone manufacturing hub of Hon Hai.
Significant growth in component and cloud-based product segments — primarily servers — helped offset weakness in networking devices amid an ongoing inventory correction cycle, Hon Hai said in a statement.
PC revenue was little changed from a year earlier, with demand remaining lukewarm.
Hon Hai expects an annual and quarterly revenue growth this quarter, traditionally an off-peak season.
Major products are entering a period of transition between old and new, it said.
Visibility is largely in line with market expectations, it said.
For the full year, Hon Hai said it expects revenue to grow significantly, fueled by strong AI server demand, an upward revision from a “neutral” outlook in November last year.
The company said it expects revenue from AI servers to surge 40 percent year-on-year this year, boosting revenue contribution to about 40 percent of its total server revenue, from 30 percent last year.
Hon Hai’s AI server revenue is likely to account for 18 percent of its overall revenue next year due to a rising share of shipments to Nvidia, JPMorgan analysts including Gokul Hariharan wrote in a note late last month.
Still, with Apple’s business making up more than half of Hon Hai’s revenue, there are challenges that remain.
iPhone shipments in China fell 33 percent in February to about 2.4 million, official data showed.
To stimulate demand, Apple even rolled out rare discounts on its Web store in January, while online resellers are cutting prices by as much as US$180.
Hon Hai is to release detailed financial figures and give its business updates on May 14.
Hon Hai said it did not expect any significant financial impact from the magnitude 7.2 earthquake that struck Taiwan on Wednesday.
Additional reporting by Bloomberg
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