- Q3 net profit T$77.5 billion, well ahead of forecast
- Company sees strong AI demand continuing into next year
- Foxconn is Nvidia's biggest server maker
TAIPEI, Nov 12 (Reuters) - Taiwan's Foxconn, the world's largest contract electronics maker, said on Thursday it was confident about its business next year given strong AI demand as it reported forecast-beating quarterly profit, but it warned about supply chain tightness.
Net profit for the July to September period for Nvidia's biggest server maker and Apple's top iPhone assembler was T$77.5 billion ($2.35 billion), up 34% on year and beating an LSEG consensus estimate of T$69.6 billion.
In an earnings release, Foxconn stuck to its previous forecast of "strong" growth for revenue this year and said it saw strong AI demand throughout this year and into next.
The company, which does not give numeric forecasts, said it predicted "high double-digit growth" in 2027 for AI rack shipments.
"Cloud and networking products already account for more than 50% of our revenue this year and we expect that share to exceed 60% over the next three to five years," Chairman Young Liu said during an earnings conference.
"We remain very confident about our operations next year and expect continued growth," Liu said, adding that global cloud service providers were expected to continue increasing AI-related capital expenditures next year, although he warned of "several external variables worth continued attention."
Liu said the global political and economic environment remained highly uncertain and fluctuations in inflation and exchange rates could potentially affect companies' operating costs.
"US midterm elections would likely have a limited impact on the industry in the short term, but their longer-term effects would need to be monitored,“ Liu said.
Looking at the AI and consumer electronics supply chains, chips, memory and some key components are currently tight, which is a challenge facing the industry as a whole, Liu said, adding that he was cautious about the outlook for the PC segment.
"Although supply bottlenecks should gradually ease as new capacity comes online, overall demand is expected to still exceed supply next year, and the tight supply-demand situation may persist for some time," he said.
Foxconn, formally called Hon Hai Precision Industry, in October reported a 47% year-on-year jump in third-quarter revenue.
Most of the iPhones Foxconn makes for Apple are assembled in China, but it now produces the bulk of those sold in the US in India. The company is also building factories in Mexico and Texas to make AI servers for Nvidia.
Foxconn has been looking to expand its footprint in electric vehicles as well.
The company's shares have risen 4% so far this year, underperforming a 49% gain on the broader Taiwan index.
Foxconn shares closed 0.8% lower on Thursday ahead of the earnings release. The main index ended down 2.6%.
($1 = 32.9740 Taiwan dollars)
Reporting by Wen-Yee Lee, Ben Blanchard and Yimou Lee; Editing by Tom Hogue and Thomas Derpinghaus
Source: Reuters