Taiwan tech giant Foxconn posts 24% jump in annual net profit

The booming market for artificial intelligence servers brought Taiwan's Foxconn a 24 percent jump in annual net profit, the company said Monday, forecasting continued strong demand for the hardware.

The world's largest contract electronics manufacturer, also known by its official name Hon Hai Precision Industry, called AI the "core driving force" of its business.

Foxconn 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.

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

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

Sky-high tech share results and valuations have fed concerns of an AI market bubble that could eventually burst, like the dot-com boom that imploded at the turn of the millennium.

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

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.

Volatility in energy markets caused by the war in the Middle East has raised questions about the impact on the strategic chipmaking industry, and other tech manufacturing.

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".

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"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.

"Hon Hai's cloud business, mostly driven by AI server growth, has become the largest revenue contributor, and should continue to outgrow the iPhone business over the next few years," Tseng added.

Analysts at J.P. Morgan gave a positive outlook for Foxconn in a note this month, saying AI server growth would "remain the main driver for Hon Hai in 2026".

In November, Foxconn announced an agreement with ChatGPT maker OpenAI to design and build AI data centre hardware.