Hon Hai Precision Industry Company’s first quarter sales increased with the fastest clip on demand for resilient data centers since 2022. This is a bright indication for the artificial intelligence sector amidst the fear of tariffs.
Taiwanese suppliers of Nvidia’s AI servers and Apple’s iPhones are riding the wave of demand for servers to power AI computing such as Alphabet and Amazon.com.
Hong Hai’s revenues rose 24.2% in the first three months of 2025, surged from $1.64 trillion ($49.8 billion) to NT$1.64 ($49.8 billion) in line with analyst estimates. The contract manufacturer said yesterday that it hopes the cloud and networking product segment will maintain growth momentum in the second quarter.
However, Hon Hai warned that while it expects overall sales to grow, it would need to closely monitor the impact of evolving global political and economic conditions “based on current visibility.”
Chinese startup Deepseek’s cheap AI model has driven doubts about the growing price competition and the economic viability of a multi-billion dollar plan in data center spending. That’s coupled with fears about a global economy slowdown, spurring a series of sudden tariffs imposed by US President Donald Trump this week.
Signs of weakness are also appearing in the AI sector. Microsoft has pulled back projects around the world, but says it is committed to spending around $800 billion in building data centers through June. According to those familiar with the situation, the software company has recently suspended or postponed consultations on sites in Indonesia, the UK, Australia, Illinois, North Dakota and Wisconsin.
Hong Hai, which delivers electronics from China’s huge production bases and Vietnamese factories to other parts of the world, will be hit directly by Trump administration’s tariffs. This includes 54% collection on Chinese products and 46% tariffs on US imports of Vietnam.
The tariffs will disproportionately hurt Apple’s smartphone business, considering its dependence on China, Creditsights analysts Jordan Chalfin, Andy Li and Michael Pugh wrote in a note to investors. Apple’s diversification efforts against Vietnam and India provide little relief, they said.
