By Yang Jie


Foxconn, the world's biggest contract electronics maker, is capitalizing on the burgeoning demand for artificial-intelligence servers, with the company projecting a significant boost in its AI server sales this year and beyond.

Foxconn spokesman James Wu said on a call with investors Tuesday that in the first quarter of 2024, AI server sales roughly tripled from a year earlier and grew by double digits from the previous quarter. AI servers now account for nearly 40% of the company's total server revenue, and Foxconn said it aims to maintain that share for the year.

Foxconn Chairman Young Liu missed the quarterly earnings call because he was traveling in Europe, the company said.

Wu predicted that the revenue generated by AI servers will continue to rise each quarter.

Known for assembling iPhones for Apple, Foxconn now plays an increasingly important role in building AI servers for U.S. giants such as Amazon, Google, Microsoft and Nvidia, in places including Mexico.

The company said cloud and networking products including servers now account for 28% of Foxconn's total revenue, up from 22% a year earlier, representing the second-largest product segment. The introduction of new AI products, such as servers powered by Nvidia's latest chips, is expected to drive further revenue growth through 2025, although consumer electronics will likely remain the company's leading revenue source, Wu said.

When asked if AI server-related revenue would account for about 10% of the group's total revenue this year, Wu didn't rule out the possibility. He said the timing of shipments for clients like Nvidia will be a determining factor.

Some market-research firms predict that the AI industry would exceed $1 trillion in scale within seven to eight years, driven largely by hardware, a trend that presents significant opportunities for Taiwanese electronic manufacturers including Foxconn.

Foxconn, formally known as Hon Hai Precision Industry, is also converting a Japanese plant of struggling display maker Sharp, in which it holds a 34% stake, into an AI data center.

Wu said the complexity of Nvidia's latest server design helped highlight the critical role of manufacturers like Foxconn in its production. He said he expects initial orders to come from North American cloud service providers and other large tech companies.


Write to Yang Jie at jie.yang@wsj.com


(END) Dow Jones Newswires

05-14-24 0722ET