Foxconn forecasts ‘double-digit’ 2027 revenue growth; Chairman Young Liu says ‘AI will be most important growth driver’

Hon Hai Precision Industry Co. expects its revenue to register double-digit growth in 2027, supported by rising global investments in artificial intelligence (AI) infrastructure, reported Bloomberg. The company's upbeat outlook follows quarterly earnings that exceeded market expectations, with growing demand for AI-related products expected to drive its business expansion.

Speaking during an earnings call on Thursday, Chairman Young Liu said demand for AI servers and high-speed networking equipment would remain robust. He identified AI as the company's biggest growth engine and forecast “double-digit” revenue expansion in 2027.

“AI will be the most important growth driver,” he stated.

Hon Hai, also known as Foxconn, is a key manufacturing partner for Nvidia Corp., assembling servers for the US chipmaker. However, the company and other Nvidia-linked suppliers could face uncertainty amid a controversy surrounding Nvidia CEO Jensen Huang, as per Bloomberg.

Recent reports about multiple alleged extramarital affairs involving Huang have brought increased scrutiny to the chief executive, potentially raising questions about the leadership and business outlook of the company driving a significant share of the global AI infrastructure expansion.

The manufacturing of AI servers has emerged as a major contributor to Hon Hai's business growth, reducing its dependence on its conventional consumer electronics operations. The Taiwanese company is witnessing increased orders for AI servers equipped with Nvidia's graphics processing units (GPUs), including the upcoming Rubin chip generation.

Hon Hai is also looking to strengthen its position in the AI server industry. In an interview with Bloomberg TV in October, Chairman Young Liu said the company was targeting a 50% share of the AI server market over the next two years. He also outlined plans to raise gross margins to approximately 10% by increasing its production of higher-value components.

Despite the strong demand outlook, concerns are emerging over the sustainability of the global AI investment boom. The data centre industry, which has increasingly relied on debt to finance its expansion, is showing signs of pressure.

Meanwhile, major AI developers are yet to demonstrate that their businesses can generate consistent and sustainable profits.

Investors are also watching capital expenditure trends among hyperscalers, with spending growth expected to moderate following several years of rapid investment in AI infrastructure.

These concerns have affected Hon Hai's stock performance. Its shares have fallen more than 20% from their peak in June as investors reassess the company's dependence on continued AI expansion. The decline has brought its market capitalisation to slightly above $100 billion.

Despite concerns over the sector's outlook, Hon Hai reported a 34% year-on-year increase in net income to NT$77.5 billion ($2.4 billion) for the three months ended September.

The earnings figure exceeded the average analyst estimate of NT$70.3 billion, indicating stronger-than-anticipated profitability during the quarter.

The company had earlier reported a 47% increase in quarterly revenue, reflecting the contribution of growing demand for AI-related hardware to its business performance.

Apart from its expanding AI server operations, Hon Hai is also seeing strong demand for premium smartphones, including Apple Inc.'s foldable iPhone Duo. Apple has described the initial response to the $2,000 device as “extraordinary”.

Foxconn, as Hon Hai is widely known, is involved in assembling the foldable smartphone as well as Apple's iPhone 18 lineup at its manufacturing facilities in China and India.

Despite expectations that memory chip supply constraints could continue into 2027, Hon Hai anticipates its consumer electronics operations to remain “stable”, according to Chairman Young Liu.

“Supply-chain shortages will have a limited impact because our main customer focuses on high-end products,” Liu stated. He added that upcoming product launches and consumers replacing their existing devices are expected to provide support to the business next year.

Apple and Hon Hai are increasingly relying on premium devices such as the iPhone Duo to improve profitability, even as worldwide smartphone shipments remain close to their lowest levels since 2013. According to Bloomberg Intelligence, sales of the iPhone Duo could reach 16 million units by September next year.

Meanwhile, Hon Hai has taken further steps to expand its presence in the electric vehicle (EV) sector. Over the past three months, the company agreed to purchase a 50% stake in Mitsubishi Electric Corp.'s automotive-components business for $727 million, marking another move to strengthen its position in the automotive supply chain.

Garvit Bhirani is a journalist based in Gurugram. He is a Deputy Chief Content Producer at LiveMint, where he covers national and international news stories, focusing on accuracy and compelling storytelling for readers. <br><br> With a total of six years of experience in journalism, he has previously worked with Vaco Binary Semantics for Google, taking on the role of news curation lead, and reported from the field on health, education, and agriculture stories for 101reporters and News9. He has also served as a content editor for entertainment and news media organisations. <br><br> Garvit holds bachelor’s and master’s degrees in journalism and mass communication from Guru Gobind Singh Indraprastha University and Gurugram University, respectively. During college days, he joined India’s only non-profit student journalism network, where he anchored daily news updates and produced his own weekly show called ‘Data Fix’. <br><br> He was selected for the YES Foundation Media for Social Change Fellowship in Delhi, the Talking Data to the Fourth Pillar residential workshop, and the VOICE Fellowship in Pune. <br><br> He holds certificates in COVID-19-verification reporting, data journalism, food & agriculture, tech policy, media literacy and countering misinformation, and tackling election disinformation courses from Thomson Foundation, IndiaSpend, The Dialogue, US Mission in India, and AFP. <br><br> He can be reached on <a href="https://www.linkedin.com/in/garvit-bhirani">LinkedIn</a> or on <a href="https://x.com/GarvitBhirani">@garvitbhirani</a> on X

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