Foxconn rides AI wave to unstoppable Q3 growth

• Taiwan’s Foxconn is expected to post a 7 per cent year-on-year rise in third-quarter net profit
• The third-quarter revenue rose 20 per cent from a year earlier, beating expectations

What happened

Taiwan’s Foxconn, the world’s largest contract electronics maker, is expected to report on Thursday (November 14) that third-quarter profit rose 7% year-on-year on robust demand for artificial intelligence servers.

So far in 2024, Foxconn’s stock has surged over 100%. As a key supplier to Apple, the company attributes its strong financial performance mainly to increased production of AI-related products. It includes data center hardware, AI chips, and advanced manufacturing equipment. The company announced Last month that its third-quarter revenue had increased by 20% compared to the same period last year. Thanks to strong sales of AI servers, the company set a new revenue record for the quarter.

Foxconn also stated that it expects its fourth-quarter revenue to continue growing year-on-year, further highlighting its optimistic outlook. Meanwhile, Foxconn will hold an earnings conference call at 3 PM on Thursday in Taipei. It will update its performance outlook for the remainder of the year.

Also read: Nvidia and Apple supplier TSMC shares pop after quarterly profit soars on AI demand

Also read: Major Apple supplier Foxconn expected to report strong Q3 results on AI boom

What it’s important

Foxconn’s strong third-quarter performance highlights a larger trend reshaping the tech industry. The growing demand for artificial intelligence technologies has benefited not only major players like Foxconn but also smaller companies that supply niche components or focus on AI-related services. However, this trend has also raised concerns about the increasing power of tech giants and their ability to outpace smaller competitors.

While Foxconn’s success is a positive sign for its shareholders and the industry as a whole. But it also highlights the challenges small businesses face. These companies can hardly match the resources of the industry giants. Moreover, the rapid expansion of AI has highlighted the risks of overreliance on a few large manufacturers. For example, companies like Vicarious and Seegrid, which focus on AI robotics, now face competition from more established players like Foxconn, who may soon expand their operations into these areas as well.

While the AI boom brings profits to large manufacturers like Foxconn, it also raises the barrier to entry for emerging businesses. If this trend continues, a handful of tech giants will likely limit the next wave of innovation, ultimately restricting diversity and competition within the tech industry.