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Apple supplier Foxconn is optimistic about 2024 and notes a significant demand for AI servers.

A significantly more optimistic perspective for this year has been taken by Apple (AAPL.O), opens new tab supplier Foxconn (2317.TW), opens new tab. On Thursday, the company stated that it projected a big boost in sales driven by growing demand for artificial intelligence servers.

The optimistic outlook follows a 33% increase in net earnings for the fourth quarter that exceeded expectations. In November, Foxconn Chairman Young Liu stated that the company, which is the largest contract electronics producer in the world, had “relatively conservative and neutral” expectations for 2024. This statement contrasts dramatically with Liu’s words.

“We see very strong demand for AI servers from our clients,” Liu stated during an online results call, expressing his expectation for a revenue rise of over 40% for the company this year.

He predicted that Foxconn’s growth will be at least as strong as the projected 30% annual growth rate for the AI server industry between 2023 and 2025.

The Taiwanese company’s net profit from October to December was T$53.1 billion ($1.7 billion), easily exceeding an LSEG SmartEstimate of T$43.5 billion. The highest quarterly year-over-year gain recorded since March 2021 was the 33% increase in profit.

It had better-than-expected sales of cloud and networking devices as well as smart consumer gadgets, in addition to a strong demand for AI servers.

Despite its China sales falling short of analysts’ projections, Apple last month announced sales and profits that exceeded Wall Street predictions, driven by growth in its iPhone division.

Consumer electronics, which included smartphones, made up 58% of Foxconn’s revenue in the fourth quarter. Cloud and networking goods, which included servers, contributed 20%.

Foxconn issued a warning, stating that although it anticipates strong growth through 2024, first-quarter revenue is expected to be lower than it was a year before, when sales spiked following the lifting of pandemic restrictions in China.

Chief Financial Officer David Huang added that, in part because of the company’s efforts to diversify its investments globally and enter new markets like semiconductors and electric vehicles, the growth in capital expenditure in 2024 would at least match the rate of the previous year.

The capital expenditures of Foxconn increased by 14% in 2023 to around T$111.7 billion ($3.6 billion).

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