Hon Hai reports highest July sales ever on demand for AI servers

Taipei, Aug. 5 (CNA) IPhone assembler Hon Hai Precision Industry Co. reported its highest ever sales for the month of July on Monday, in the wake of strong global demand for artificial intelligence servers.

In a statement, Hon Hai, better known internationally as Foxconn, said it posted consolidated sales in July of NT$572.35 billion, up 21.98 percent from a year earlier and up 16.63 percent from a month earlier.

In the first seven months of the year, Hon Hai's consolidated sales totaled NT$3.44 trillion, up 6.54 percent from a year earlier.

Hon issued its sales report after its stock tumbled by the maximum 10 percent on the market Monday, resulting in a combined 17 percent plunge to NT$168 a share over the past two sessions amid panic selling of AI-related stocks around the world.

Hon Hai, the world's largest contract electronics maker, said its cloud and networking division reported strong year-on-year growth in sales in July due to solid global AI demand.

The company has forecast its AI server sales will grow more than 40 percent from a year earlier in 2024, and has said AI servers are expected to account for more than 40 percent of its total server revenue this year.

Also in July, Hon Hai's electronics component and computing divisions reported a significant year-on-year increase in sales, while the smart consumer electronics division saw little change in sales due to a product transition period.

On a month-on-month basis, Hon Hai said, the smart consumer electronics division reported a sharp increase in sales as customers started to rebuild their inventories.

Analysts attributed the large gains to orders placed by Apple Inc. and other smartphone brands before the launch of their new products in the fall.

Hon Hai said sales posted by its electronics component division also grew significantly from a month earlier in July due to an increase in automotive parts and other core components.

In the first seven months of 2024, cloud and networking sales grew due to AI server demand, and its electronics component and computing divisions also posted strong sales growth.

The computing division's sales, on the other hand, were down slightly from a year earlier due to a high comparison base.

Hon Hai forecast that its sales for the July-September period will grow from a quarter earlier and from a year earlier.

The company will hold an investor conference on Aug. 14 to detail its second quarter results and give guidance for the third quarter as well as for 2024 as a whole.

Meanwhile, Largan Precision Co., a supplier of smartphone camera lenses to Apple, posted consolidated sales in July of NT$5.44 billion, its highest monthly level since NT$6.79 billion in November 2023.

Its July revenue was up 55 percent from a year earlier and up 34 percent from a month earlier.

Largan said some of its clients have begun rebuilding inventories to meet demand for their new products, which are expected to hit the market soon. Among Largan's major clients are Apple and several brands in the Android camp, according to analysts.

The company said August sales are expected to parallel July's.

In July, Largan's 20 mega-pixel lenses and higher -- which have a higher profit margin -- accounted for 10-20 percent of its total sales, with 10-20 mega-pixel lenses making up 60-70 percent, 8 mega-pixel lenses representing less than 10 percent, and 5 mega-pixel lenses making up 20-30 percent, the company said.

In the first seven months of the year, Largan generated NT$27.73 billion in consolidated sales, up 33 percent from a year earlier.

Its stock fell 7.04 percent on Monday, after remaining relatively flat last week.