Hon Hai expects AI server revenue to top NT$1 trillion this year

Taipei, May 14 (CNA) Taiwan-based manufacturing giant Hon Hai Precision Industry Co. reiterated Wednesday that it expects sales generated by its artificial intelligence servers to surpass NT$1 trillion (US$33.03 billion) this year.

Amid continued optimism over global AI development, Hon Hai Chairman Young Liu (劉揚偉) said he expects sales from AI servers to grow more than 50 percent from a year earlier in 2025.

Speaking at an investor conference, Liu said delivery of AI servers powered by American AI chip designer Nvidia Corp.'s GB series of graphics processing units (GPUs) to Hon Hai's cloud service providers in North America is expected to start in the second quarter

Such an upbeat outlook followed data in the first quarter, when revenue generated by AI servers and general servers surged more than 50 percent from a year earlier, Liu said, adding that Hon Hai has received a large number of AI server orders.

Before the investor conference started, Hon Hai, an iPhone assembler and artificial intelligence maker, reported that it made NT$42.11 billion in net profit in the first quarter of this year, soaring 91 percent from a year earlier on strong AI server demand, but falling 9 percent from a quarter earlier on slow season effects.

Hon Hai will continue to seek business opportunities in the Middle East after Nvidia Corp. confirmed overnight that the company has secured large orders for AI chips in Saudi Arabia, Liu said.

As part of the global AI server supply chain, Hon Hai has established close ties with its clients; and with the company owning a 40 percent share of the global AI server market, it will no doubt be capable of providing such products in the Middle East, he added.

In addition to AI servers, Hon Hai has worked with partners in Saudi Arabia for years on electric vehicle charging and information and communications technology development, Liu said.

Elsewhere, Liu noted that Hon Hai started to invest in India in 2006, and the competitive edge of its goods made in India is expected to grow as it looks to meet demand from clients.

Stronger Taiwan dollar impact

While he remained optimistic about the AI outlook, Liu said he has turned more cautious about the impact of a stronger Taiwan dollar against the U.S. dollar this year.

By taking into account the value of the Taiwan dollar as well as fast-changing U.S. tariff policies, the company has slightly adjusted its outlook for this year to "significant growth" from the previous estimate of "strong growth," Liu said.

Those comments were made when Liu answered questions about the impact of a stronger Taiwan dollar from investors after the U.S. dollar fell 6.21 percent against the Taiwan dollar in just two sessions -- May 2 and May 5. The market attributed the plunge to pressure from the United States as Taipei entered tariff talks with Washington, later denied by the central bank.

Although the greenback showed signs of stabilizing to some extent after the central bank stepped in, the downtrend is expected to continue.

Global expansion

As Hon Hai has expanded globally, extending its reach in production to countries and regions such as Mexico, Vietnam, India and Europe, Liu said he has faith the company will remain resilient amid tariff and foreign exchange concerns.

Through regionalized manufacturing, Hon Hai has 223 plants and offices in 24 countries around the world with 54 footholds in Americas, 12 in Europe and 12 in India, Liu added.

According to Hon Hai, the company's capital expenditure is expected to grow more than 20 percent this year with 60-70 percent to be assigned for production expansion in India, Vietnam, the U.S. and Mexico.

Also at the investor conference, Hon Hai's chief financial officer David Huang (黃德才) said that every NT$1 drop in the value of the U.S. dollar causes a roughly 3 percent drop in revenue for Hon Hai, with its gross margin -- the difference between revenue and cost of goods sold -- likely to fall 0.1 percentage points.

Hon Hai will continue to hedge risks created by volatility in the Taiwan dollar to minimize foreign exchange losses, Huang said.