(Bloomberg) — Hon Hai Precision Industry Co.’s first-quarter sales rose at their fastest clip since 2022 on resilient data center demand, a bright sign for the artificial intelligence sector amid tariff-induced fears.
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The Taiwanese supplier of Nvidia Corp.’s AI servers and Apple Inc.’s iPhones is riding a wave of demand for servers to power AI computing by the likes of Alphabet Inc. and Amazon.com Inc.
Hon Hai’s revenue surged 24.2% for the first three months of 2025 to NT$1.64 trillion ($49.8 billion), in line with analyst estimates. The contract manufacturer said Saturday 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 would need to closely monitor the impact of evolving global political and economic conditions.
Chinese startup DeepSeek’s cheaper AI model has spurred doubts about growing price competition and the economic viability of plans for billions of dollars in data center outlays. That’s 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 Corp. has pulled back on projects around the world, although it says it remains committed to spending about $80 billion building data centers through June. The software company has recently halted talks for, or delayed development of, sites in Indonesia, the UK, 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. That includes a 54% levy on Chinese goods as well as a 46% tariff on Vietnamese imports by the US.
The tariffs would 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 provides little relief, they said.
“Hardware OEMs 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 $100 billion blow for the global tech sector, based on the value of US tech imports in 2024.
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