Foxconn expects its AI server business to at least double in the second half of this year, and the world’s largest contract electronics maker, best known for making the iPhone, has seen a rapid rise in generative artificial intelligence systems such as ChatGPT. You will get the latest benefits of the rise.
Foxconn Chairman Young Liu said at the company’s annual meeting on Wednesday that AI servers could see triple-digit growth in the second half of the year. That demand for server processors has made chip designer NVIDIA the most valuable semiconductor company, with its market capitalization briefly surpassing the $1 trillion mark on Tuesday.
Liu said the rapid proliferation of generative AI systems such as ChatGPT and the increasing reliance of users on them is driving demand.
Foxconn is best known as Apple’s largest manufacturing partner, but the group also makes a vast array of other electronic products and components, from computers and industrial robots to electric vehicles and semiconductors. Like rivals such as Quanta Computer, the company produces most of the servers sold by branded vendors such as his Dell, as well as manufacturing directly for large data center users such as Google and Amazon.
Of Foxconn’s TWD 6.6 trillion ($215 billion) in revenue last year, TWD 1.1 trillion came from server manufacturing, with 40% of the global market share, and 20% of its server business was in the AI field.
Liu’s forecasts for this year come just a week after Nvidia raised its revenue outlook citing a sharp increase in data center capacity needed to train AI systems. Nvidia projects that he will have $11 billion in sales in the three months to the end of July, beating analysts’ expectations by more than 50%. That’s what prompted him to raise the company’s valuation to $1 trillion this week.
Taiwan Semiconductor Manufacturing, the world’s largest contract chip maker, also says it’s “structurally demanding” partly because of AI-driven growth.
Foxconn’s bullish forecast contrasted sharply with its very cautious overall outlook. Liu reiterated earlier forecasts that revenues in 2023 will be flat year-on-year, pointing to a lack of prospects due to inflation and geopolitical tensions weighing on the global economy.
As electronics manufacturing service providers such as Foxconn focus on assembling high-tech gadgets and manufacturing various low-end components, they are getting far less revenue from the AI server boom than chip designers such as Nvidia. increase.
Of the $10,424 Intel Sapphire Rapids AI server costs, only $495 is spent on assembly and testing, according to chip research firm Semianalysis. Other components manufactured by Foxconn (connectors, chassis, cooling systems, motherboards, etc.) are also a small part of the AI server’s bill of materials.
“But as you know, we have a very wide range of operations,” said a source close to Foxconn. “So when you add it all up, it’s a huge momentum.”
