Apple Supplier Foxconn Rides the AI Wave, Doubles Down on Server Business Amid ChatGPT Frenzy

Author: Anusuya Lahiri | May 31, 2023 07:12am

• Hon Hai Precision Industry Co Ltd (OTC:HNHPF), operating as Foxconn, forecasts its AI server business to at least double in the second half of this year, taking a cue from Nvidia Corp (NASDAQ:NVDA).
• The critical Apple Inc (NASDAQ:AAPL) supplier expected up to triple-digit growth in AI servers in the second half, Financial Times cites chair Young Liu.
• Liu said the ChatGPT frenzy and increasing reliance were driving the boost in demand.
• Foxconn also makes many other electronic products and components, from computers and industrial robots to electric cars and semiconductors. 
• Liu’s forecast for this year comes just a week after Nvidia boosted its revenue outlook due to the exponential growth in data center capacity needed to train AI systems.
• Taiwan Semiconductor Manufacturing Company Ltd (NYSE:TSM) has also discussed “structurally higher demand” partly due to AI-fuelled growth.
• Liu reiterated his earlier forecast that 2023 revenues would be flat compared with last year due to inflation and geopolitical tensions.
• Of Foxconn’s NT$6.6 trillion ($215 billion) in revenue last year, NT$1.1 trillion came from manufacturing servers, which has a 40% global market share, and 20% of the server business was in AI.
• Foxconn focused on assembling tech gadgets and making a range of lower-end components, therefore receiving a much smaller piece of the revenues from the AI server boom than chip design companies such as Nvidia.
• However, Foxconn sources acknowledged an extensive footprint leading to much momentum.
• Price Action: HNHPF shares closed higher by 0.41% at $6.61 on Tuesday.
• Photo via Wikimedia Commons

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