Hon Hai reports 2nd highest March sales

Taipei, April 6 (CNA) Taiwan-based manufacturing giant Hon Hai Precision Industry Co. on Friday reported its second highest sales for the month of March, which showed growth from a year earlier, driven by solid demand for smart consumer electronics.

Hon Hai, an iPhone assembler also known as Foxconn in the global market, reported consolidated sales of NT$447.5 billion (US$13.98 billion) for March, up 11.8 percent from a year earlier.

The figure was Hon Hai's second highest for the month of March, after the NT$507.4 billion recorded in March 2022, and was also a 26.97 percent monthly increase, the report showed.

The company said it also recorded year-on-year sales growth in March, driven by large orders for its smart consumer electronics products, as clients were keen to build their inventories, and also by solid demand for cloud-based items, which boosted the revenue of its cloud and networking division.

Hon Hai's electronics component division also saw year-on-year revenue growth in March, while sales in its computing product division remained flat amid lukewarm demand for PCs, according to the report.

However, all four business divisions recorded strong growth from the previous month, the company said, citing seasonal factors such as the long Lunar New Year holiday that reduced the number of working days in February.

In the first quarter of the year, Hon Hai's consolidated sales stood at NT$1.32 trillion, down by a quarterly 28.58 percent and dropping from a year earlier by 9.61 percent, which was in line with the company's earlier estimates.

Meanwhile, the company said Wednesday that it was making a long-term investment of an additional US$120 million in the Mexico-based firm FII AMC Mexico S. DE R.L. DE C.V, via the Hon Hai subsidiary Cloud Network Technology Singapore Pte. Ltd.

FII AMC Mexico is owned by Foxconn Industrial Internet Co. (FII), a Shanghai-listed subsidiary of Hon Hai.

While Hon Hai did not give any details of the additional investment, industrial sources said it was aimed at expanding AI server production capacity, as the global market for AI applications continued to boom.

The FII plant in Mexico will be used for the development of Surface Mount Technology (SMT), which is one of the critical technologies in AI server production, the sources said.

In February, FII said it had acquired a piece of land in Mexico at a cost of about 453 million pesos (US$27.53 million) for the construction of the plant.

Foxconn has also established SMT development hubs in the United States and Vietnam, according to industry sources.

At an investor conference in March, Hon Hai upgraded its 2024 outlook to "significant growth" from "neutral," citing spiking demand for AI servers amid the growing popularity of generative AI applications.

According to the company, its AI server sales are expected to grow more than 40 percent in 2024, accounting for about 40 percent of its total server revenue.