Nvidia partner Hon Hai’s sales jump 24% on AI demand

Hon Hai Precision Industry’s first-quarter sales rose at their fastest clip since 2022 on resilient data centre demand, a bright sign for the artificial intelligence (AI) sector amid tariff-induced fears.

The Taiwanese supplier of Nvidia Corp’s AI servers and Apple’s iPhones is riding a wave of demand for servers to power AI computing by the likes of Alphabet and Amazon.com.

Hon Hai’s revenue surged 24.2 per cent for the first three months of 2025 to NT$1.64 trillion (S$66.6 billion), in line with analyst estimates. The contract manufacturer said on April 5 that it expects its cloud and networking products segment to maintain growth momentum in the second quarter.

But Hon Hai cautioned that while it expects overall sales to grow, “based on current visibility”, it will need to closely monitor the impact of evolving global political and economic conditions.

Chinese start-up DeepSeek’s cheaper AI model has spurred doubts about growing price competition and the economic viability of plans for billions of dollars in data centre outlays. This is coupled with fears of a global economic slowdown spurred by an array of steep tariffs levied by US President Donald Trump this week. 

Signs of weakness are appearing even in the AI sector. Microsoft has pulled back on projects around the world, although it says it remains committed to spending about US$80 billion (S$108 billion) building data centres till end-June. The software company has recently halted talks for, or delayed development of, sites in Indonesia, Britain, Australia, Illinois, North Dakota and Wisconsin, according to people familiar with the situation. 

Hon Hai, which delivers electronics to the rest of the world from giant production bases in China and factories in Vietnam, will further shoulder a direct hit from the Trump administration’s tariffs. This includes a 54 per cent levy on Chinese goods as well as a 46 per cent tariff on Vietnamese imports by the US.

The tariffs will disproportionately hurt Apple’s smartphone business, given its reliance on China, wrote CreditSights analysts Jordan Chalfin, Andy Li and Michael Pugh in a note to investors.

Apple’s diversification efforts to Vietnam and India provide little relief, they said.

“Hardware OEMs (original equipment manufacturers) will be directly impacted, particularly companies that sell smartphones, PCs and servers,” the analysts said.

They estimate that the reciprocal tariffs will deal a nearly US$100 billion blow to the global tech sector, based on the value of US tech imports in 2024.

Hon Hai chairman Young Liu said in March that the company is exploring ways to expand production in several US states.

Earlier in 2025, Apple said it is partnering with Foxconn to begin making servers in Houston. Other Taiwanese electronics manufacturers are also following suit. BLOOMBERG