Hon Hai forecasts AI server sales growth to top 170% in Q3

Taipei, Aug. 14 (CNA) Hon Hai Precision Industry Co., the world's largest contract electronics maker, has expected sales generated from artificial intelligence servers will grow more than 170 percent from a year earlier in the third quarter of this year, while reiterating AI server revenue is expected to top NT$1 trillion (US$33.35 billion) in 2025.

Speaking at an investor conference, Kathy Yang (楊秋瑾), Hon Hai's current rotating chief executive officer, said the third quarter AI server sales growth will beat a 60 percent year-on-year increase seen in the second quarter, driving up the company's overall sales in 2025.

In the third quarter, Yang said sales generated from server racks are expected to surge 300 percent from a year earlier, Yang said. For the entire 2025, Hon Hai has left its forecast of AI server revenue unchanged at more than NT$1 trillion and Yang said sales momentum will continue into 2026 for long-term growth.

Currently, AI servers make up more than 50 percent of the total server sales in Hon Ha, Yang said.

Before the investor conference began, Hon Hai, also known as Foxconn on the global markets, reported the highest net profit of NT$44.36 billion for the April to June period on consolidated sales at NT$1.79 trillion.

Due to global strong demand for AI servers, Hon Hai's cloud and networking division accounted for 41 percent of its total sales in the second quarter, up from 34 percent in the first quarter.

Yang said it was the first time that the sales ratio claimed by the cloud and networking division surpassed 35 percent claimed by the iPhone assembler's smart consumer electronics division.

Shipments of Hon Hai-made AI servers to the United States will stay strong in the second half of this year as the company has intensified efforts to expand production capacity in the U.S. market, where the manufacturer runs 12 production sites, Yang said.

According to Yang, Hon Hai will expand AI server production and liquid cooling capacity in the U.S. states of Texas and Wisconsin, while the company will boost the capacity of cloud and networking and servers in Ohio.

Commenting on uncertainties created by the U.S. tariff policies, Yang said Hon Hai runs 233 plants and offices in 24 countries around the world and the company is capable of adjusting its production and logistics, if necessary, to take on the impact resulting from the tariff issues.

Also at the investor conference, Hon Hai's chief financial officer David Huang (黃德才) said whenever the Taiwan dollar rises NT$1 against the U.S. dollar on average, Hon Hai is likely to see its sales fall about 3 percent.

If the Taiwan dollar averages at NT$29 against the U.S. dollar in the third quarter, up 10 percent from a year earlier, Huang said, Hon Hai could feel a large pinch from a stronger Taiwan dollar.

Fortunately, Huang said, the Taiwan dollar has turned relatively stable currently after a surge in the second quarter, but Hon Hai will continue to take advantage of its economies of scale, optimized procurements, and advanced automation to put costs under control to encounter foreign exchange fluctuations.

At a time of production expansion, Huang said, Hon Hai's capital expenditure rose more than 25 percent from a year earlier to NT$79.8 billion in the first half of this year, adding that capex will grow more than 20 percent in 2025.

Meanwhile, Hon Hai spokesman James Wu (巫俊毅) said Hon Hai has worked with American AI chip designer Nvidia Corp. in humanoid robot development, and the next generation humanoid robotics and applications are scheduled to make a debut on Hon Hai's Tech Day event slated for Nov. 21-22.

In the electric vehicle business, Wu cited Hon Hai EV chief strategy officer June Seki as saying his company will help its Japanese partners to develop Model A sedan and electric buses.

In the semiconductor field, Hon Hai has signed a memorandum of understanding with the France-based Thales and Radiall to form a strategic partnership and establish a joint venture to develop advanced IC assembly and testing technologies, according to Yang.