Nvidia and Apple Assembly Partner Sees Better-Than-Expected Sales Growth
Nvidia and Apple assembly partner Hon Hai Precision Industry reported better-than-expected sales growth last quarter as the artificial intelligence (AI) infrastructure buildout continued apace.
Hon Hai Reports 15% Revenue Growth
Hon Hai, also known as Foxconn, on Sunday (Jan 5) said that its revenue over the past three months was NT$2.13 trillion (S$89 billion), up 15%, exceeding analyst expectations for a 13% rise. December brought in NT$654.83 billion, up 42%.
Significant Sales Growth Expected in 2025
The company also said it expects significant sales growth for the first quarter of this year.
AI Hardware Suppliers Enjoy Boost from Data Centre Spending
Hon Hai and other AI hardware suppliers in Taiwan have enjoyed a boost from massive spending on servers for data centres by the biggest US tech firms such as Alphabet and Microsoft. However, the lack of a compelling use case for AI so far has been making investors nervous about when the expansion might slow.
Cloud Business Expected to Match iPhone Sales in 2025
Hon Hai expects revenue from its cloud business, which includes AI servers, to match sales from its iPhone-making division in 2025.
Diversification Efforts
Hon Hai’s AI market is important for its effort to diversify its business away from Apple, whose iPhones are seeing muted growth. Apple has historically accounted for over half of the Taiwanese company’s sales.
Electric Vehicle Market Pursuit
Hon Hai also aims to break into the electric vehicle market, though that venture has yet to have any meaningful effect on its earnings. The company reached out to Renault about a tie-up with Nissan Motor, which Renault owns 36% of. For now, that pursuit is on hold as Nissan and Honda Motor negotiate a merger, Bloomberg News reported.
Conclusion
Hon Hai’s better-than-expected sales growth is a positive sign for the company’s efforts to diversify its business and reduce its reliance on Apple. The company’s focus on AI hardware and cloud services is expected to drive growth in the coming years, and its foray into the electric vehicle market could potentially lead to new revenue streams.
FAQs
Q: What is Hon Hai’s revenue growth rate?
A: Hon Hai reported a 15% revenue growth rate for the past three months.
Q: What is Hon Hai’s expected sales growth for the first quarter of 2025?
A: The company expects significant sales growth for the first quarter of 2025.
Q: What is Hon Hai’s focus in terms of diversification?
A: Hon Hai is focusing on AI hardware and cloud services to reduce its reliance on Apple and drive growth.
Q: What is Hon Hai’s plan for the electric vehicle market?
A: Hon Hai aims to break into the electric vehicle market, but that venture has yet to have any meaningful effect on its earnings.
