Foxconn Expects AI Demand to Remain Strong, Sees Limited Mideast Impact — Update

By Sherry Qin

Foxconn Technology Group reported double-digit growth in annual net profit and expects continued robust demand for its artificial-intelligence servers in 2026 despite the uncertainty and risks posed by the Middle East conflict.

The world's largest contract electronics maker on Monday said shipments of AI server racks could grow exponentially this year after reaching a market share of around 40%.

2026 is shaping up to be a promising year as AI investments by global hyperscalers continue to rise, Foxconn Chairman Young Liu said on the earnings call. While identifying the Middle East conflict as the biggest external risk this year, he said that Foxconn has expanded its manufacturing footprint in recent years to prepare for situations like this.

"Diversified production capacity and localized manufacturing have enhanced our resilience in the face of various unforeseen risks," he said.

Liu said earlier in March that the business impact was limited so far, though he indicated that a prolonged war and higher oil prices could push up prices of raw materials. He targeted revenue exceeding 9 trillion New Taiwan dollars, equivalent to about US$280 billion, for 2026, up from NT$8.10 trillion in 2025.

The latest message of reassurance comes as shares in the Taiwanese company, formally known as Hon Hai Precision Industry, have been on a wild ride in recent weeks. The stock, which rose 25% in 2025 amid resilient AI server sales, has dropped more than 10% since the conflict in the Middle East began, losing momentum after hitting a peak in late February. Taiwan is among the Asian economies most exposed to the surge in energy prices caused by the crisis.

The company, once best known as an iPhone assembler for Apple, now generates a significant share of revenue from making AI servers for the likes of Nvidia and Amazon, becoming a key player in the AI revolution that has seen tech giants pour billions of dollars in chips, servers and data centers.

In 2025, revenue from cloud and networking products--including AI servers--accounted for 40% of Foxconn's total revenue, surpassing the 38% from smart consumer electronics. Profit increased 24% for the year, lower than market expectations.

The company has continued to ride the global data-center boom, teaming up with ChatGPT maker OpenAI late last year to design and manufacture AI infrastructure hardware in the U.S. A week later, it announced an additional US$569 million AI infrastructure investment in Wisconsin.

For the three months ended December, net profit slipped 2% from a year earlier to NT$45.21 billion, missing analysts' expectations for strong growth as a substantially higher tax expense weighed on the bottom line. Revenue grew at its fastest pace since the first quarter, climbing 22% to NT$2.206 trillion.

Ahead of the earnings, analysts said Nvidia's strong fourth-quarter results boded well for Foxconn, with the AI server maker well positioned to capture growth from Nvidia's GB200 and GB300 servers and future product cycles.

Write to Sherry Qin at sherry.qin@wsj.com

(END) Dow Jones Newswires

March 16, 2026 06:31 ET (10:31 GMT)