AI’s Impact on Foxconn's Growth, Manufacturing & Innovation

AI is impacting major players in the tech sector, from chip manufacturers to electronics assemblers.

Amongst the competition between these global giants to develop and implement AI technologies, the demand for specialised hardware and components has surged, creating new opportunities and challenges for businesses across the supply chain.

For instance, the rise of AI is not only impacting product development but also revolutionising manufacturing processes, leading to increased efficiency and productivity.

Foxconn’s Q3 results reflect the effect AI is having on big technology players. 

Foxconn reports robust Q3 performance

Foxconn, the world's largest contract electronics manufacturer and a major supplier to Apple, has announced strong financial results for the third quarter of 2024.

According to the company, revenue reached NT$1.85tn (US$57.2bn), marking a 20% increase compared to the same period last year.

The company also reported that its net profit for July-September rose to NT$49.3bn (US$1.52bn), representing a 14% year-on-year increase.

This performance marks the fifth consecutive quarter of profit growth for Foxconn.

Foxconn attributed the company's strong performance to robust demand for AI servers.

The company also reported that revenue from AI servers grew by more than 200% in the first three quarters of 2024 compared to the same period last year.

Foxconn reports: “Chief Financial Officer David Huang said that although margins in the third quarter were affected by the product mix, due to the competitive advantage of Foxconn's operating scale, the absolute amount of gross profit, operating profit and net profit all increased compared with the same period last year.

“As a technology manufacturing platform service company, Foxconn will continue to maximise profits through its competitive advantages in operational scale and vertical integration.”

The company's shares have additionally surged more than 100% so far in 2024, significantly outperforming the broader market's 28% gain, reflecting investor confidence in Foxconn's AI-focused strategy.

AI drives future growth prospects

Foxconn is positioning itself to capitalise on the growing demand for AI technologies.

The company is expanding its manufacturing capabilities for AI-related products, including the construction of a facility in Mexico dedicated to producing Nvidia's GB200 superchips.

Foxconn Chairman Young Liu expressed optimism about the future, predicting that 2025 will be the "AI Year" for the group.

“While inflation is likely to ease, the international political and economic situation, monetary policy and the development of the AI industry will be the most important influencing factors next year”, Foxconn reports from Chairman Liu.

He also laid out “five major operating pillars”:

• Smart Manufacturing
• Smart EV
• Smart City
• Semiconductors
• AI

The company additionally expects the shipment volume of AI servers to increase quarter by quarter in 2025, potentially accounting for more than 50% of overall server revenue.

This growth is anticipated to become the most significant driver for the company's future performance.

Foxconn’s AI utilisation for manufacturing

Foxconn's AI strategy extends beyond server production. 

The company is focusing on leveraging AI to enhance its own manufacturing processes.

As Foxconn continues to invest in Gen AI for manufacturing, the company reports that its Smart Manufacturing initiative has increased revenue per employee by more than 80%.

The company is also collaborating with several major international partners on AI, robotics and automation projects.

Looking ahead, with smart manufacturing being one of the five major operating pillars for 2025, Foxconn's focus on becoming a technology manufacturing platform service company is expected to drive its growth in the coming years.

Its success in this area may serve as a bellwether for the broader industry, signalling a shift towards AI-driven growth and innovation.

Foxconn reports Chairman Liu’s future view: “he said he is optimistic about next year, in which AI will be the most important growth driver for the Group.”

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