Nvidia's core supplier Foxconn receives $1.1 billion loan, expected to expand Blackwell AI server capacity.

Media reports cited informed sources as saying that Hon Hai Precision Industry Co., Ltd., from Taiwan, raised approximately $1.1 billion through a three-year loan. With this funding support, they are expected to expand the production capacity of AI servers based on NVIDIA Corporation's Blackwell architecture in the near future. Hon Hai chairman Liu Yangwei has stated that the demand for Blackwell AI servers in the market is "very crazy." This also highlights that amidst the booming trend of artificial intelligence, this core manufacturer of Apple Inc.'s iPhone is also a core manufacturer of NVIDIA Corporation's AI servers, continuing to benefit from the surge in demand for AI servers. According to one source, this loan is a so-called "new currency loan," providing the company with a larger scale of funding on top of its existing debts. The funds will be used for various corporate purposes, focusing on expanding AI server production capacity, which may include the construction of a next-generation large AI factory in partnership with NVIDIA Corporation. The source revealed that 17 banks, including Taiwan and International Bancshares Corporation, provided this loan. Hon Hai did not respond to requests for comment from journalists. Hon Hai, the parent company of Foxconn, predicted during the third quarter financial results meeting in November 2024 that the demand for AI servers will significantly increase, with the momentum of increasing demand expected to continue into next year. Chairman Liu Yangwei told analysts at the meeting that cloud-based AI server products will become a new pillar of the company's revenue growth by 2025, potentially rivaling the long-standing highest share of revenue from smartphone assembly sales. Hon Hai is working with NVIDIA Corporation to build the world's largest AI server assembly plant in Mexico, the aforementioned next-generation large AI factory. These cutting-edge AI servers will be equipped with NVIDIA Corporation's latest AI GPUs, such as large-scale assemblies based on the Blackwell architecture GB200 AI chip, and Hon Hai plans to establish its new headquarters in a 45-story super commercial building in southern Taiwan. Financial data released by Hon Hai last week showed a net profit of NT$49.3 billion (approximately RMB 10.98 billion) in the third quarter (July-September), a 14% increase year-on-year. This marks the fifth consecutive quarter of profit growth for Hon Hai, one of the core suppliers of NVIDIA Corporation, exceeding analysts' expectations the general expectation of 14 LSEG analysts was NT$46.3 billion. Last month, Hon Hai announced revenue data ahead of schedule, with total revenue in the third quarter increasing by 20% compared to the same period last year, surpassing market expectations and setting a record for the highest quarterly revenue performance in history. The management at Hon Hai has given optimistic performance forecasts, predicting that AI servers will account for approximately 50% of its total server revenue from foundry operations next year. Regarding the fourth quarter performance, at the financial results meeting last Thursday, Hon Hai management predicted that total revenue in the fourth quarter will continue to "significantly increase year-on-year," without providing specific numerical guidance. As the world's largest iPhone manufacturer, Hon Hai's business has long been closely related to Apple Inc.'s smartphones. However, with the global frenzy surrounding the deployment of artificial intelligence, revenue generated by foundry AI servers, created by the strong foundry technology and capacity built up over the years in consumer electronics and server assembly, has become the "revenue engine" second only to iPhone foundry business for Hon Hai, and in recent years has begun tailor-making AI servers the most core hardware for AI training/inference capability for tech giants such as NVIDIA Corporation, Microsoft Corporation, and Amazon.com, Inc. NVIDIA Corporation has jumped to become Hon Hai's second largest customer after Apple Inc. Furthermore, the world's highest market value company, NVIDIA Corporation (NVDA.US), is set to announce their financial performance for the third quarter of the fiscal year 2025 ending in October after the U.S. market closes on Wednesday, which will be early Thursday morning Beijing time. Wall Street analysts widely expect this highest valued global company to report a sharp increase in revenue, driven by the continued explosive growth in demand for artificial intelligence (AI) infrastructure by global enterprises and core government agencies. Bank of America Corp. states that NVIDIA Corporation's performance may have a greater impact on the S&P 500 index compared to the impact of the next non-farm payroll data, CPI, or the Federal Reserve's decision. Wall Street analysts generally expect this chip giant's total revenue for the third quarter to increase by 84% year-on-year, reaching $33.28 billion, with net profit jumping to $17.45 billion, or 70 cents per share, significantly higher than the $9.24 billion in the same period last year, which was 37 cents per share. This also means that NVIDIA Corporation will achieve record revenue and profit growth for six consecutive quarters. According to Visible Alpha's expectations, Wall Street analysts expect the total revenue from NVIDIA Corporation's data center business in the third quarter to climb to another record high of $29.53 billion after setting a historical new high of $26.3 billion in the second quarter. Dan Ives, a well-known analyst from Wedbush, expects NVIDIA Corporation's Q3 total revenue to exceed market expectations by $2 billion, and the performance outlook is also expected to exceed expectations by $2 billion.