Foxconn has immense confidence in growth momentum due to AI, chairman says

NEW TAIPEI, Taiwan, May 29 (Reuters) – Taiwan’s Foxconn, the world’s largest contract electronics manufacturer, has immense confidence in its growth momentum because of soaring AI demand, Chairman Young Liu said on Friday.

The traditional mid-year seasonal slump for tech suppliers no longer happens, Liu told an annual shareholders meeting in New Taipei, adding that he was very optimistic about the second half of the year.

“Unless a highly severe ‘black swan’ event occurs – which I haven’t seen, and there are currently no signs of – based on what we see now, the second half of the year looks very good.”

He noted colossal investment in AI by major cloud service providers that has exceeded $700 billion this year.

“Their capital expenditure is our market. It has already reached $700 billion, and their capital expenditure next year is expected to potentially reach $1 trillion. This gives us immense confidence in our future growth momentum,” he said.

Foxconn, which is Nvidia’s biggest server maker and Apple’s top iPhone assembler, this month reported a forecast-beating 19% rise in first-quarter profit.

Asked about the impact of the global shortage of memory chips, Liu said some of Foxconn’s high-end customers had been affected but not in a significant way.

“If the high-end market is impacted, the entire world will feel it, and we hope that doesn’t happen. So for us, the current situation is that the impact on our clients through the end of the year is limited,” he said.

The company, formally called Hon Hai Precision Industry, said this month it expects its capital expenditure to grow 30% this year from last year’s T$174 billion ($5.6 billion) as it expands manufacturing capacity for AI servers.

The company’s shares closed up 9.9% on Friday, after Dell, which also makes AI servers, gave an upbeat forecast, sending its own shares soaring.

Foxconn’s shares have risen 25% so far this year, though that has underperformed the broader Taiwan index’s 55% gain.

($1 = 31.3720 Taiwan dollars)

(Reporting by Ben Blanchard; Editing by Jamie Freed and Edwina Gibbs)