Nvidia partner Hon Hai reports a 52% increase in sales as Europe prepares to place its own orders.
Hon Hai reported that its revenue for August reached NT$921.8 billion, approximately $29.1 billion, marking a 52% increase year on year driven by demand for AI servers, significantly surpassing analyst expectations for the quarter. In June, the company entered into a manufacturing partnership worth EUR 120 million with Bull, the French state-owned computing firm, distributing work between Pardubice and Angers.
According to Bloomberg News, Hon Hai’s August revenue saw a 52% rise, while July's revenue grew by 54%. Analysts are forecasting around 37% growth for the three months leading up to September, indicating that the company is performing well above their predictions.
The Taiwanese firm assembles servers for Nvidia, and its monthly filings have become an important indicator for the AI market. Despite growing concerns regarding overcapacity, increasing debt, and intense competition, the revenue figures continue to defy these issues. TNW reported that AI servers have now surpassed all other products manufactured by Hon Hai combined.
The remaining revenue largely comes from Apple. Also known as Foxconn, the company is the main assembler of iPhones, operating on slimmer margins with facilities in China and India, while Apple is gradually shifting some production to Luxshare Precision.
Analysts from Bloomberg Intelligence, Steven Tseng and Rebecca Wang, point out that the consumer electronics segment somewhat dilutes the momentum generated by the cloud sector, resulting in gross margins and forward price-to-earnings ratios that fall below industry averages.
As the order book continues to grow, market debates arise over the eventual returns on this spending, leading to a disconnect between demand and confidence. TNW has followed this discourse through the cash flow of major tech firms, and this week, Chinese investors reduced their trade despite witnessing the strongest earnings season in five years.
Meanwhile, Europe is poised to contribute to this order book and has already chosen its assembler. Bull and Foxconn announced their manufacturing partnership on June 1, with an initial commitment of over EUR 120 million, according to Bull's statement. Components and initial testing will take place at Foxconn's facility in Pardubice, Czech Republic, while final assembly, integration, and system validation will occur at Bull’s factory in Angers.
Jesse Chao, head of AI and quantum at Foxconn, stated that the collaboration aims to advance "building sovereign AI infrastructure in Europe" and enhance a resilient supply chain. The French state completed its acquisition of Bull from Atos for EUR 404 million in April, two months prior to the announcement of the partnership with Foxconn, framing the purchase as a measure of sovereignty. The Commission has pledged EUR 20 billion to AI gigafactories, with 77 proposals submitted across 16 member states, and the first construction is scheduled for 2027. The racks will be assembled in France from components manufactured in Czechia by a Taiwanese company generating monthly revenues of $29 billion.
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Nvidia partner Hon Hai reports a 52% increase in sales as Europe prepares to place its own orders.
Hon Hai's sales in August increased by 52% due to demand for AI servers. In June, the company entered into a EUR 120 million manufacturing agreement with France's state-owned Bull.