Hon Hai Precision Industry Co. posted a surprise earnings fall after weak Chinese iPhone sales eroded margins, though the Nvidia Corp. supplier forecast a doubling in AI-related revenue this quarter.
The Taiwanese company’s net income plunged 13% to NT$46.3 billion ($1.4 billion), far short of analysts’ estimates for a 2.3% gain. Hon Hai, one of Nvidia’s most important server assemblers, expects revenue to rise in 2025, though it didn’t specify the extent of gains.
Hon Hai’s server manufacturing arm has expanded alongside the boom in demand for the Nvidia chips that drive AI development. But it still derives the majority of its revenue from iPhones, and Apple reported a surprise decline in sales of its flagship device during the holiday quarter. Hon Hai in January revealed a deceleration in Dec-quarter sales.
While big tech firms from Microsoft to Amazon have pledged to keep spending on data centers, Chinese startup DeepSeek‘s rise has spurred doubts about whether all that expenditure is justified. Hon Hai, which ships electronics to the rest of the world from giant production bases in China, is also grappling with uncertainty surrounding Trump-administration tariffs in 2025.
Hon Hai Chairman Young Liu said his company wasn’t seeing a slowdown of AI server demand from cloud service providers. In fact, it was exploring ways to expand production in several US states for customers – furthering US President Donald Trump’s goal of moving manufacturing back to America.