Hon Hai Precision Industry Co. reported an unexpected decline in earnings, with net income falling 13% to NT$46.3 billion ($1.4 billion), significantly missing analysts’ estimates for a 2.3% gain. The Taiwanese company, a key supplier for Nvidia Corp., attributed the profit miss to weak Chinese iPhone sales, which eroded margins. Despite this, Hon Hai forecast a doubling of AI-related revenue in the current quarter.
Hon Hai, one of Nvidia’s most important server assemblers, expects overall revenue to rise in 2025, though specific gains were not detailed. The company’s server manufacturing arm has grown with the surge in demand for Nvidia chips that power AI development. However, the majority of Hon Hai’s revenue still comes from iPhones, and Apple recently reported a surprise decline in sales of its flagship device during the holiday quarter.
In January, Hon Hai revealed a slowdown in December-quarter sales. While major tech firms like Microsoft and Amazon have committed to continued spending on data centers, the emergence of Chinese startup DeepSeek has raised questions about the justification for such expenditures. Additionally, Hon Hai is dealing with uncertainties surrounding potential Trump-administration tariffs in 2025.
Analysts anticipate that AI demand will help boost Hon Hai’s revenue in 2025. Sales for the first two months of the year increased by 25%, accelerating from the previous year. This growth reflects Nvidia’s $11 billion in quarterly revenue from its advanced Blackwell chip, described as “the fastest product ramp” in the company’s history.
Hon Hai has been expanding its investments in the US to produce more AI servers domestically. Apple announced a partnership with Foxconn to start producing servers for Apple Intelligence in Houston. Meanwhile, Hon Hai continues to build what it claims will be the world’s largest AI server assembly plant in Mexico. The company also assembles products for Nintendo Co., which is preparing for the launch of its Switch 2 later this year, expected to be the biggest release in the gaming industry’s history.
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