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
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