Foxconn has immense confidence in growth momentum due to AI, chairman says

[NEW TAIPEI] Taiwan’s Foxconn, the world’s largest contract electronics manufacturer, has immense confidence in its growth momentum because of soaring AI demand, chairman Young Liu said on Friday (May 29).

The traditional mid-year seasonal slump for tech suppliers no longer happens, Liu told an annual shareholders meeting in New Taipei, adding that he was very optimistic about the second half of the year.

“Unless a highly severe ‘black swan’ event occurs – which I have not seen, and there are currently no signs of – based on what we see now, the second half of the year looks very good.”

He noted colossal investment in AI by major cloud service providers that has exceeded US$700 billion this year.

“Their capital expenditure is our market. It has already reached US$700 billion, and their capital expenditure next year is expected to potentially reach US$1 trillion. This gives us immense confidence in our future growth momentum,” he said.

Foxconn, which is Nvidia’s biggest server maker and Apple’s top iPhone assembler, this month reported a forecast-beating 19 per cent rise in first-quarter profit.

Asked about the impact of the global shortage of memory chips, Liu said some of Foxconn’s high-end customers had been affected but not in a significant way.

“If the high-end market is impacted, the entire world will feel it, and we hope that does not happen. So for us, the current situation is that the impact on our clients through the end of the year is limited,” he said.

The company, formally called Hon Hai Precision Industry, said this month that it expects its capital expenditure to grow 30 per cent this year from last year’s NT$174 billion (S$7.1 billion) as it expands manufacturing capacity for AI servers.

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The company’s shares have risen 19 per cent so far this year, underperforming the broader Taiwan index’s 54 per cent gain. REUTERS