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Hon Hai Precision Industry Co. Ltd (OTC:HNHPF)-owned Foxconn that manufactures iPhones that are the apple of the eye of Apple Inc (NASDAQ:AAPL) reported its first quarter results. With the first quarter being a typically quiet period, it comes as no surprise that Foxconn posted a revenue dup. However, Foxconn is expecting revenue growth in the second quarter despite it still being an off-peak season.
First quarter highlights
For the first quarter, Foxconn posted a 9.6% drop in revenue, however, Apple supplier noted that its cloud and networking segment reported significant revenue growth. But total revenue amounted to 1.32 trillion New Taiwan dollars which equates to about $41.2 billion and it was also 28.58% lower compared to the previous, fourth, quarter. But, fourth quarter is usually when suppliers race to enable tech giants like Apple to satisfy the holiday demand. But, according to Counterpoint Research, overall shipments if smartphones declined 3.2% during 2023.
The AI hype is in the air
Although Foxconn is behind AI chipmaking leader, Nvidia Corporation (NASDAQ:NVDA), it still has gained momentum of late.
As a reminder, Foxconn teamed up with Nvidia last year. Foxconn and Nvidia joined class to develop certain “AI factories” which are a new class of data centers that use Nvidia chips to power all kinds of applications ranging from large language models to training autonomous vehicles. Also, Foxconn will develop smart solution platforms that are based on technologies that Nvidia developed. By gaining access to Nvidia’s solutions, Foxconn will get to offer safe AI-powered EVs and make its mark in the new era. In simple words, Nvidia joined forces with Foxconn on its path to accelerate the AI Industrial Revolution. Considering that AI development requires more than chips, there is room for all kinds of industrial contributors as even the all-mighty Nvidia cannot do everything alone, which bodes well for Foxconn.
Despite the traditional off-peak period and a recent earthquake, higher March revenue from consumer-electronics and cloud demand fueled Apple supplier to expect revenue growth in the second quarter. Also, Foxconn shares rose almost 21% year-to-date.
Rebound hopes are based on AI
Although the sales slump offers little hope for the rebound of the Apple star, the iPhone, , the growing demand for AI servers empowered Foxconn to expect a revenue rebound in the second quarter and be optimistic for the year ahead.
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This article is from an unpaid external contributor. It does not represent Benzinga's reporting and has not been edited for content or accuracy.
