(May 14): Nvidia Corp’s major server assembly partner Hon Hai Precision Industry Co reported a stronger-than-expected increase in quarterly profit, highlighting sustained spending on hardware essential for artificial intelligence (AI).
Net income for the first quarter ended in March rose to TWD49.9 billion (US$1.6 billion or $2.0 billion), while analysts on average expected TWD48.4 billion. The Taiwanese company earlier reported a 30% rise in sales that was broadly in line with expectations.
Hon Hai still expects sales to expand substantially this year, with AI being a key growth driver, executives said on a post-earnings call on Thursday. The US will gradually become the company’s largest AI server production hub as most of the major cloud service providers it supplies are in the country, rotating chief executive officer Michael Chiang said.
The Taipei-based company is benefitting from soaring AI demand, which is helping to offset higher costs. It warned in March about heightened risks to the supply chain stemming from the Middle East crisis. Elevated memory chip pricing has eroded profitability at companies including Xiaomi Corp, Panasonic Holdings Corp and Canon Inc.
Hon Hai, also known as Foxconn, has established itself as a key AI hardware player by assembling servers that house Nvidia accelerators. That’s as Alphabet Inc, Amazon.com Inc, Meta Platforms Inc and Microsoft Corp hike their capital spending plans, setting aside US$725 billion for AI this year.
The Taiwanese company also derives a significant chunk of sales from assembling Apple Inc’s iPhones and MacBooks and is in position to benefit from any positive reception for the latest iPhone 17 product family.
See also: Trump says he discussed AI guardrails, Nvidia chips with Xi
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