Demand for AI servers sees Foxconn fly and suppliers come along for the ride

Foxconn has singled out AI servers as a reason for its record revenue, and its suppliers’ share prices surged on the news.

The contract manufacturer, formally known as Hon Hai Precision Industry Co, posted its December 2024 results on Sunday with the first-mentioned figure being unaudited consolidated revenue of NT$654.8 billion ($20 billion) – which represented a 2.64 percent month-over-month dip and a 42.31 percent year-on-year surge.

The company also compiled quarterly results, with Q4 bringing NT$2.13 billion ($65 billion) of revenue – up 15.03 percent quarter-on-quarter and 15.17 percent year-on-year, and a record quarterly figure.

All four of Foxconn’s segments – cloud and networking, computing products, smart consumer electronics, and components – experienced “strong growth”, but only AI servers were mentioned as a source of the revenue increase.

Investors were warned that Q1 will be slower, as is usually the case at this time of year. But the company forecast “significant growth” compared to last year’s numbers.

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This matters because Foxconn is the world’s top contractor manufacturer for electronics, and counts Apple, HP, and Dell among its consumer-facing clientele, and deals directly with hyperscalers who rely on the company to produce their servers and other infrastructure.

If Foxconn revenue is surging, that’s therefore welcome news for the whole tech ecosystem because it means consumers and corporates are spending.

As noted by CNBC, the day after Foxconn announced its results share prices for several semiconductor vendors popped a point or two – or three points in the case of Nvidia.

Correlation is of course not the same as causation, so perhaps share price jumps at companies in Foxconn’s orbit could instead be attributed to anticipation of news at the annual CES electronics souk that’s under way in Las Vegas this week.

Or perhaps markets are excited by Foxconn’s mention of strong demand for AI servers, which would of course also mean demand for memory, GPUs, CPUs, networks, and storage.

Lots of them, for months to come – indicating AI continues to drive plenty of spending.

The price of Foxconn’s own shares have risen by around five percent since its revenue announcement. A full and formal results announcement for Q4 2024 is due in March, when we’ll learn if all that revenue also delivered improved profits. ®