Apple supplier Foxconn is optimistic about 2024 and notes a significant demand for AI servers

Apple supplier Foxconn is optimistic about 2024 and notes a significant demand for AI servers
Apple supplier Foxconn is optimistic about 2024 and notes a significant demand for AI servers

A new supplier tab was released by Apple and Foxconn, which said it expected a significant rise in sales due to the growing demand for artificial intelligence servers.

Apple (AAPL.O) introduces a new supplier tab, Foxconn (2317.TW), which stated on Thursday that it anticipated a large increase in sales driven by the surging demand for artificial intelligence servers.

This is a significantly bullish prognosis for the company for this year.

The optimistic outlook follows a 33% increase in net earnings for the fourth quarter that exceeded expectations. In November, Foxconn Chairman Young Liu stated that the company, which is the largest contract electronics producer in the world, had “relatively conservative and neutral” expectations for 2024. This statement contrasts dramatically with Liu’s words.

We see a lot of demand from our clients for AI servers,” Liu stated during an online results call, predicting a revenue increase of over 40% for the company this year.

He predicted that Foxconn’s growth will be at least as strong as the projected 30% annual growth rate for the AI server industry between 2023 and 2025.

The Taiwanese company’s net profit from October to December was T$53.1 billion ($1.7 billion), easily exceeding an LSEG SmartEstimate of T$43.5 billion. The highest quarterly year-over-year gain recorded since March 2021 was the 33% increase in profit.

Foxconn had better-than-expected sales of cloud and networking devices as well as smart consumer gadgets, in addition to a strong demand for AI servers.

Despite its China sales falling short of analysts’ projections, Apple last month announced sales and profits that exceeded Wall Street predictions, driven by growth in its iPhone division.

Consumer electronics, which included smartphones, made up 58% of Foxconn’s revenue in the fourth quarter. Cloud and networking goods, which included servers, contributed 20%.

Foxconn issued a warning, stating that although it anticipates strong growth through 2024, first-quarter revenue is expected to be lower than it was a year before, when sales spiked following the lifting of pandemic restrictions in China.

Chief Financial Officer David Huang added that, in part because of Foxconn’s efforts to diversify its investments globally and enter new markets like semiconductors and electric vehicles, the growth in capital expenditure in 2024 would at least match the rate of the previous year.

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