Taipei (AFP) – Taiwanese tech giant Foxconn on Thursday reported a record net profit for the third quarter, as the global buildout of data centres fuels demand for the AI servers needed to operate them. The world’s largest electronics contract manufacturer has gone beyond making low-margin iPhones to producing AI servers for US tech titan Nvidia, as well as electric vehicles and robots.
Its shares and those of other tech firms plunged last week after the Democrats’ sweep of Congress in the US midterms would allow them to ramp up AI regulation and slow the data centre expansion. Foxconn partner Nvidia has also weighed on sentiment, with US media reporting the company’s board is preparing to oust CEO Jensen Huang after revelations of his extramarital affairs, including with an alleged Chinese spy.
Foxconn said net profit for July-September hit NT$77.5 billion (US$2.4 billion), up 34 percent on-year. The result beat estimates of NT$70.3 billion in a Bloomberg survey of analysts. Revenue for the three months was up 39 percent at NT$7.7 trillion. Chief financial officer David Huang said Foxconn’s “third-quarter revenue, operating income, net income, and earnings per share all reached record quarterly highs.”
“AI servers have become Foxconn’s most important growth driver,” chairman Young Liu told a briefing. Looking ahead, he said “we remain very confident in next year’s operations and believe growth will continue.” But he warned of stubborn bottlenecks in the AI and consumer electronics supply chains, with overall demand “still expected to outpace supply heading into next year.” That will mean “tight supply-demand conditions may persist for some time,” he said.
Foxconn has a longstanding partnership with Nvidia. In one of their collaborations, the companies are working to build an “AI factory supercomputer” in Taiwan. Governments and tech giants have been pouring huge sums into building data centres that can train and run AI tools such as chatbots, image generators, and agents that can execute tasks. The buildout has turbocharged business for Foxconn — which makes the servers used in the centres — but any slowdown could potentially hurt the company’s bottom line.
Data centres require large amounts of electricity, placing increased pressure on grids often still reliant on fossil fuels. In many cases, they also ramp up strain on water resources used to cool computing equipment. A backlash is growing worldwide against their environmental impacts, and there are also concerns over noise, pollution, their appearance, and how many jobs the facilities actually create.
© 2024 AFP
