The Japan Times - AI to drive growth despite geopolitics, Taiwan's Foxconn says

Strong demand for AI hardware fuelled a 24 percent annual net profit jump last year for Foxconn, the world's largest contract electronics manufacturer.

Energy markets have been roiled by the war in the Middle East, raising concerns for big tech manufacturers, but company chairman Young Liu struck an upbeat tone at an earnings call with analysts.

"Over the past few months, there have been significant changes in tariffs, geopolitics, and global monetary policy," he said.

"However, driven by the strong growth of AI servers, I believe 2026 will still be a very good year, and we expect to see robust growth."

Foxconn -- also known by its official name Hon Hai Precision Industry -- has gone beyond assembling low-margin Apple iPhones to making AI servers for Nvidia along with electric vehicles and robotics.

It's a move that is paying off as tech firms worldwide race to spend big on training and deploying rapidly evolving AI systems.

In 2025, Foxconn's net profit came to NT$189.4 billion ($5.9 billion), up from NT$152.7 billion in 2024.

Revenue jumped 18 percent on-year to NT$8.1 trillion, the firm said, just beating the estimates of a Bloomberg survey of economists.

- AI ambitions -

Sky-high tech share results and valuations worldwide have led to concerns of an AI market bubble that could eventually burst.

But Foxconn on Monday forecast "strong AI server demand" with "high double-digit quarter-on-quarter growth" expected for AI rack shipments in the first quarter of 2026.

Liu said the company wanted to become "the most trusted industrial platform of the AI era".

Cloud and networking services accounted for 40 percent of Foxconn's business portfolio in 2025, up from 30 percent in 2024.

Meanwhile, smart consumer electronics declined from 46 percent to 38 percent.

Huge global demand for memory chips to use in AI data centres has caused a shortage that is threatening higher prices for everyday gadgets.

"Everyone is concerned about memory shortages and related price hikes" fors smart consumer products, Liu said Monday.

But "since our product portfolio is mainly composed of higher-priced models, the impact we've observed so far has been relatively limited" while demand has not changed, he added.

Ahead of Monday's earnings release, Bloomberg Intelligence analyst Steven Tseng told AFP that for Foxconn, "so far the impact from the Middle East conflict appears largely manageable".

"As the region is not a major market for either AI hardware or smartphones, the main risk is more on costs than demand, driven by higher oil prices and some logistic disruptions," he said.

K.Yamaguchi--JT