Foxconn registered a spike in profit growth in Q4 2023 despite falling sales, driven by demand for cloud and networking gear to power AI applications.

While previously forecasting revenue in the opening quarter of 2024 to decline year-on-year, chairman and CEO Young Liu said in an earnings call the company expects “significant” growth in full-year sales, aided by growing demand for servers.

Due to an increase in generative AI applications, he added “the visibility on AI servers has become very high, prompting an upward adjustment”. Inventory levels also improved at end-2023, falling 22 per cent from a peak in 2022.

Net profit jumped 33 per cent to TWD53.2 billion ($1.7 billion).

The contract manufacturer’s sales declined in recent months due to slowdown in iPhone demand in China. Counterpoint Research data showed unit sales in the country fell 24 per cent year-on-year in the first six weeks of 2024.

The company, a key supplier to Apple, reported in early January Q4 sales declined 5.4 per cent to TWD1.9 trillion. Revenue in the first two months of 2024 dropped nearly 18 per cent to TWD874.6 billion, with sales of smart consumer electronics products declining and computing products down slightly.

Capex in 2023 rose 14 per cent to TWD111.7 billion, with the 2024 outlay expected to be higher than last year and up for the fourth consecutive year.