iPhone maker records massive sales jump on AI demand

Apple Inc.’s main manufacturing partner, also known as Foxconn, reported sales of NT$548.3 billion ($17.1 billion).

Foxconn’s topline has begun to recover from a protracted smartphone slump, helped by a growing business supplying data center operators with servers containing Nvidia Corp.’s AI accelerators. (Reuters)

Hon Hai Precision Industry Co.'s revenue rose 33% in August, accelerating from the previous month thanks to demand for servers powering AI applications.

Apple Inc.'s main manufacturing partner, also known as Foxconn, reported sales of NT$548.3 billion ($17.1 billion) — a record for the month of August. That pace was up sharply from growth of 22% in July.

Foxconn's topline has begun to recover from a protracted smartphone slump, helped by a growing business supplying data center operators with servers containing Nvidia Corp.'s AI accelerators. Last month, it said it expects revenue to grow over the rest of year, reversing successive quarterly declines. The company's shares are up close to 70% in 2024.

Some investors preach caution. Nvidia reported earnings that failed to live up to expectations, triggering a record selloff. And analysts have issued fresh warnings that AI's potential is thus far largely untested and unproven. 

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Nvidia's clarification of its scheduled production ramp-up of Blackwell, its next-generation AI GPU platform, in late 2024 helps remove uncertainty over likely growth of the AI server supply chain next year. Despite very limited contribution of the new chips this year, major ODMs such as Hon Hai, Quanta and Wiwynn are set to post triple-digit growth in AI server sales with stellar shipments of systems featuring Hopper chips, Nvidia's current mainstream platform, in 2H24.

Still, Hon Hai has set itself the goal of securing 40% of the global AI server market, relying on relationships with many of the world's biggest tech companies and its own manufacturing expertise. 

The Taiwanese company also benefits from consumer electronics demand, and the addition of AI features and enhancements may encourage mobile users to upgrade their devices. Shipments of the iPhone in China have in recent months have bounced back, and the global smartphone market is recovering. Apple is preparing to unveil the iPhone 16 next week.

“Entering the peak season in the second half of the year, we anticipate our operation to gradually gain momentum,” the company said in a statement.

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