Hon Hai Precision Industry (Foxconn) held its third quarter online earnings call on November 14, during which chairman Young Liu highlighted record-breaking cumulative revenue, gross margin, operating profit, and net profit compared to previous years, despite operational challenges. Growth is expected to continue into the fourth quarter and 2025, driven by traditional peak season demand and AI servers.
While Liu maintained an optimistic outlook regarding the company's five focus segments, he cautioned that Foxconn's original target of achieving a 5% market share in the global EV market might be delayed.
Strong AI momentum drives future growth
Looking ahead to the fourth quarter of 2024, Liu projected significant growth compared to the previous quarter and year as operations picked up during the traditional year-end peak season. The company expects robust demand for AI servers to boost growth figures for the entire year.
For 2025, Liu identified five key growth areas: AI, semiconductors, and the three main platforms of smart manufacturing, smart EVs, and smart cities. Among these, AI will be the primary growth driver across the corporate group. Although inflation has moderated, factors that may impact next year's performance include the global political and economic environment, monetary policies, and developments in the AI industry.
Liu indicated that worldwide economic growth in 2025 should match 2024 levels, according to International Monetary Fund (IMF) predictions, though Foxconn will continue to monitor geopolitical effects on the global economy. Nevertheless, AI server demand will continue to surge, as the AI industry evolves at a faster pace than the semiconductor industry.
Regarding AI servers, Liu emphasized Foxconn's competitive advantage in systems design, vertical integration, and global reach. Due to strong client demand, cumulative revenue from AI servers in the first three quarters of 2024 has more than doubled compared to the same period last year, accounting for over 40% of server-related revenue. Combined with growth in general-purpose servers, the cloud networking segment now represents more than 30% of total corporate group revenue.
With new AI-related products set to launch, Liu noted that Foxconn has evolved into both an AI supplier and user, positioning itself to become a major manufacturer with AI supercomputing capacity through its under-construction supercomputing center. Furthermore, AI is expected to drive growth in other business sectors such as smart consumer products, cloud networking, and end-user computers and components.
The company has continued to invest in generative AI applications in manufacturing, with smart manufacturing helping to boost per capita revenue across the corporate group by more than 80%. Foxconn is currently collaborating with several major global companies in AI, robotics, and automation, with smart manufacturing expected to produce even more impressive results backed by vast AI computing power.
Preparing for political transition
Regarding the upcoming political transition in the US, Liu emphasized that Foxconn has always aligned with clients' demands and business strategies in its global operations. The company maintains expansion plans in key markets such as the US, China, and India, contributing to economic growth and employment in each region.
Addressing US operations, Liu stated that investment policies and business environments would be key considerations, with any investment adjustments depending on the new administration's direction. However, investments in AI and EVs will continue to grow, given the increasing demand for localized production in these sectors.
Liu highlighted Foxconn's nearly four-decade presence in the US, noting that the company currently employs more than 5,000 American workers across nearly 50 sites, generating US$25.6 billion in annual revenue. He affirmed that US investments will continue to follow the company's principles of long-term, stable technological development and international engagement.
Regarding the Wisconsin project, Foxconn has adapted to market changes, and following the 2021 agreement terms, total investment has reached US$1 billion, while employment has increased by 40%. In 2024, the Wisconsin plant's revenue grew by 140% compared to the previous year, making Foxconn the largest taxpayer in Racine County.
EV market goals require more time
Liu acknowledged that Foxconn will likely take longer to reach its original goals of achieving 5% global EV market share and generating NT$1 trillion in revenue from its EV business, both initially targeted for 2025. This delay stems from industry-specific challenges and broader market factors. However, amid increasing demand for localized production in a competitive market, Foxconn's contract design and manufacturing (CDMS) business model has proven attractive, with new opportunities including an imminent contract with a Japanese carmaker.
In discussing EV market developments, Liu outlined several key milestones achieved over the past two years: mass production models, which Foxconn has already established; securing orders from conventional carmakers, expected soon; and encouraging conventional carmakers to adopt Foxconn's reference prototype designs, anticipated within the next two years.
Article translated by Kevin Wang
