Foxconn, a major supplier for Apple, has forecasted a three-digit growth for its artificial intelligence server business. This growth is mainly due to the high demand for AI products such as ChatGPT. Foxconn is known for being the world’s biggest contract electronics manufacturer and assembles devices for many international brands, including Apple’s iPhone products.
Foxconn’s Diversification into Different Areas
Foxconn has diversified beyond electronics assembly and expanded into different areas such as electric vehicles, semiconductors, and servers. Chairman Young Liu announced during an annual shareholder meeting in Taipei that Hon Hai’s revenue for servers reached 1.1 trillion Taiwan dollars ($36 billion) in 2022, obtaining a 40 percent global market share. Liu also mentioned that Foxconn ranks first in global market share for mobile phones, personal computers, and servers.
The Reason Behind the Demand for AI
The AI server market is now growing faster than expected, and this is mainly due to ChatGPT, an AI program that gained popularity last year. ChatGPT has the ability to generate essays, poems, and conversations from the briefest of prompts. It has been so successful that it sparked a gold rush with billions of dollars of investment in the field. Liu attributed the jump in demand to ChatGPT and stated that the company’s latest AI servers also use Nvidia chips.
Foxconn’s Outlook for the Future
Despite Foxconn’s rosy future for AI, Liu mentioned that the company maintains a “flat” outlook for the 2023 full year. This is after its first-quarter profits plunged 56 percent on weakened demand due to a global downturn. Liu stated that “the global tightening monetary policies, coupled with tense geopolitics and significant uncertainty of inflation, have a relatively large impact on the economic outlook.”
Foxconn is diversifying beyond electronics assembly and expanding into different areas such as electric vehicles, semiconductors, and servers. The company has predicted a three-digit growth for its artificial intelligence server business due to the high demand for AI products such as ChatGPT. Despite this, Foxconn maintains a “flat” outlook for the 2023 full year due to weakened demand caused by a global downturn.
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