IPhone Maker Hon Hai Hits a Record High Buoyed by AI, Apple
A 1200V Sic Mosfet Wafer during a Hon Hai Precision Industry Co. event in Taipei, Taiwan, on Wednesday, Oct. 18, 2023. Hon Hai, best known as the maker of Apple Inc.’s iPhone, is expanding its push into electric vehicles by integrating artificial intelligence, attempting to bolster its strategy for one of the hottest segments of the automotive industry.
(Bloomberg) — Hon Hai Precision Industry Co.’s shares jumped to a record high after posting its strongest monthly sales growth since the start of 2023, potentially raising expectations for iPhone and AI server sales.
The company, which assembles the majority of Apple Inc.’s smartphones, reported a 19% rise in monthly revenue to NT$510.9 billion ($15.8 billion), compared with NT$429.2 billion in April 2023. That was a record for the month, Hon Hai said in a statement. Its stock rose by as much as 6.7% on Monday, the most intraday in about two weeks.
Hon Hai, known also as Foxconn, makes most of the world’s iPhones but is diversifying to put greater focus on building datacenter server racks and other equipment for artificial intelligence clusters.
Still, with Apple’s business making up more than half of revenue, investors are watching the Taiwanese company for clues on iPhone sales. It posted a near-10% plunge in first-quarterly revenue in part because Apple’s flagship device underperformed. The Taiwanese company reports full quarterly earnings next week.
“Among product lines, the computing segment grew the most month-on-month, due mainly to Apple’s new MacBook Air launch,” Citigroup analysts wrote in a research note. “Pull-in demand of iPhone was also stronger ahead of China’s Labor Day holiday.”
The second-quarter remains a traditional off-peak season, and major products are entering a period of transition between old and new, Hon Hai said in its statement. The visibility for the second quarter is approximately in line with current market expectations, with operations for the period expected to show both quarter-on-quarter and year-on-year growth, the company said.
Apple on Thursday surprised investors with a decent beat on quarterly revenue from China, defying a plethora of negative data points on iPhone sales. That discrepancy could stem from differences in the way independent analysts account for the business, or higher average sales prices than anticipated.
What Bloomberg Intelligence Says
Hon Hai may face hurdles boosting its iPhone-related revenue in 2024 given 1Q’s downbeat demand and the swirl of unknowns clouding the broader picture. Despite being the iPhone’s largest producer, Hon Hai’s margins may be at increased risk from diminished scale economies within the iPhone business, and the steady capacity relocation to India.
– Steven Tseng, analyst
Click here for the research.
Investors scrutinize Apple’s performance in China because of the country’s role as both a huge market and global iPhone production base.
In the current period, Apple expects sales to climb by a percentage in the low single digits. The company predicted that both its iPad and services business would grow by double-digits, though it declined to give a forecast for the iPhone.
–With assistance from Betty Hou.
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