(Bloomberg) – Hon Hai Precision Industry Co. displayed a drop in surprise profits after Chinese Chinese sales eroded the margins, although the supplier of Nvidia Corp. provides for a doubling of the income related to AI this quarter.
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The net net income of the Taiwanese company plunged from 13% to 46.3 billion dollars NT ($ 1.4 billion), well below the estimates of analysts for a gain of 2.3%. Hon Hai, one of Nvidia’s most important servers of servers, expects income to increase in 2025, although he did not specify the extent of the earnings.
The Hon Hai servers’ manufacturing arm has developed in parallel with the Boom of demand for Nvidia chips which lead the development of AI. But he still draws the majority of his revenues from iphones, and Apple reported a surprise drop in sales of his flagship device during the holiday quarter. Hon Hai in January revealed a deceleration in December sales.
While the large technological companies of Microsoft Corp. At Amazon.com Inc. were committed to continuing to spend in data centers, the rise of the Chinese startup Deepseek stimulated doubts as to all these expenses are justified. Hon Hai, who ships electronics to the rest of the world from giant production bases in China, is also struggling with uncertainty surrounding the Trump administration prices in 2025.
What Bloomberg intelligence says
Sequential growth may have slowed down in 4q due to a model transition, but could resume in 1q. The IT segment could have provided greater growth than expected due to the penetration of the PC AI and the previous order before tariff hikes. The activity of the components could have supported a dynamic of sales on an expansion of the automotive unit and an increasing vertical integration. However, the division of intelligent consumption electronics could have been silent when the demand for iPhone dropped in China. The profit of Hon Hai could increase on rapid sales growth, but the gross margin could be diluted due to the drop in profitability of AI servers at high prices.
– Steven Tseng and Sean Chen, analysts
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Analysts for the moment expect AI’s demand to revive the first line of Hon Hai in 2025. Sales of the first two months of this year jumped 25%, accelerating compared to last year. This reflects the $ 11 billion in NVIDIA quarterly revenue from its most advanced Blackwell chip, which it called “the fastest product ramp” in the history of the company.