Hon Hai Precision Industry Co (鴻海精密) yesterday said artificial intelligence (AI) server revenue this quarter is to more than double from a year ago, driven by demand for AI servers based on Nvidia’s GB200 chip from the world’s major cloud service providers (CSP) and large-scale enterprises.
The growth momentum would extend into the rest of the year, Hon Hai said.
Hon Hai chairman Young Liu (劉揚偉) said that the company expects AI server revenue to swell to about NT$1 trillion (US$30.35 billion), following annual growth of 150 percent last year.
Photo: Chiang Ying-ying, AP
That meant AI server revenue would account for more than 50 percent of the company’s overall server revenue this year, up from 40 percent to 42 percent last year, Liu said.
Servers and networking products would soon become the largest revenue contributor to Hon Hai, replacing smartphones, he said.
“The AI server market is thriving now, thanks to strong demand for GB server racks from the world’s major CSPs and first-tier brand vendors. Those [machines] are adopted particularly for cloud computing and high-performance data centers,” Liu said, citing better order visibility.
Hon Hai is also ramping up production of GB200 servers with an improving yield, Liu said, adding that the growth momentum would be supported by the upcoming production of AI servers equipped with new-generation AI chips, he said.
As a key supplier to Nvidia, Hon Hai aims to seize more than 40 percent of the world’s AI server market, Liu said.
Liu also dismissed rumors about ebbing demand for AI servers from cloud service providers (CSPs).
“There was a rumor saying that CSP demand will peak this year. And then, it will go down after this year. We are not seeing that. We think the demand is still pretty strong,” at least for Hon Hai, Liu said.
Asked about growing competition from servers powered by AI application-specific ICs (ASICs), Liu said: “Most of the training still happens in the cloud side, so most activities on the AI demand is mostly still for AI training.”
Looking at the current quarter, Hon Hai expects revenue to grow significantly on an annual basis, beating the seasonal slowdown the company has seen over the past 5 years, Liu said.
All major product segments are expected to see strong year-on-year growth this quarter, led by servers and networking products, Liu said.
Asked about how to cope with US President Donald Trump’s tariff policy, Liu said Hon Hai is discussing with its customers to build new manufacturing sites in the US.
To fund those new factories, Hon Hai plans to hike its capital expenditures this year by 20 percent from NT$136.3 billion last year. The company said it would discuss with customers to absorb cost increases in order to keep a stable profit margin.
Hon Hai yesterday posted the strongest annual net profit in the company’s history, amounting to NT$152.71 billion, up 7 percent from NT$142.1 billion in 2023. Earnings per share rose to NT$11.01 from NT$10.25, the highest since 2008.
The board of directors yesterday approved a cash dividend distribution of NT$5.8 per common share, the best since the company’s listing in 1991. That represented a payout ratio of 52.7 percent.
Hon Hai Precision Industry Co (鴻海精密) yesterday said that its research institute has launched its first advanced artificial intelligence (AI) large language model (LLM) using traditional Chinese, with technology assistance from Nvidia Corp. Hon Hai, also known as Foxconn Technology Group (富士康科技集團), said the LLM, FoxBrain, is expected to improve its data analysis capabilities for smart manufacturing, and electric vehicle and smart city development. An LLM is a type of AI trained on vast amounts of text data and uses deep learning techniques, particularly neural networks, to process and generate language. They are essential for building and improving AI-powered servers. Nvidia provided assistance
STILL HOPEFUL: Delayed payment of NT$5.35 billion from an Indian server client sent its earnings plunging last year, but the firm expects a gradual pickup ahead Asustek Computer Inc (華碩), the world’s No. 5 PC vendor, yesterday reported an 87 percent slump in net profit for last year, dragged by a massive overdue payment from an Indian cloud service provider. The Indian customer has delayed payment totaling NT$5.35 billion (US$162.7 million), Asustek chief financial officer Nick Wu (吳長榮) told an online earnings conference. Asustek shipped servers to India between April and June last year. The customer told Asustek that it is launching multiple fundraising projects and expected to repay the debt in the short term, Wu said. The Indian customer accounted for less than 10 percent to Asustek’s
‘DECENT RESULTS’: The company said it is confident thanks to an improving world economy and uptakes in new wireless and AI technologies, despite US uncertainty Pegatron Corp (和碩) yesterday said it plans to build a new server manufacturing factory in the US this year to address US President Donald Trump’s new tariff policy. That would be the second server production base for Pegatron in addition to the existing facilities in Taoyuan, the iPhone assembler said. Servers are one of the new businesses Pegatron has explored in recent years to develop a more balanced product lineup. “We aim to provide our services from a location in the vicinity of our customers,” Pegatron president and chief executive officer Gary Cheng (鄭光治) told an online earnings conference yesterday. “We
LEAK SOURCE? There would be concern over the possibility of tech leaks if TSMC were to form a joint venture to operate Intel’s factories, an analyst said Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) yesterday stayed mum after a report said that the chipmaker has pitched chip designers Nvidia Corp, Advanced Micro Devices Inc and Broadcom Inc about taking a stake in a joint venture to operate Intel Corp’s factories. Industry sources told the Central News Agency (CNA) that the possibility of TSMC proposing to operate Intel’s wafer fabs is low, as the Taiwanese chipmaker has always focused on its core business. There is also concern over possible technology leaks if TSMC were to form a joint venture to operate Intel’s factories, Concord Securities Co (康和證券) analyst Kerry Huang (黃志祺)