Under the shadow of tariffs, Hon Hai's July revenue increased by 7.25% year-on-year, hitting a new low since January

Nvidia's key partner Hon Hai Precision Industry saw a slowdown in revenue growth in July, indicating that even though the artificial intelligence boom has brought strong tailwinds, the uncertainty caused by U.S. tariffs is beginning to affect demand for electronic products. On August 5, Hon Hai announced July sales of NT$613.87 billion, a year-on-year increase of 7.25%, reaching NT$613.8 billion (approximately USD 20.5 billion) . This growth rate is the lowest since January and is also below analysts' general expectation of a 12.2% revenue growth for the company in the third quarter. Month-on-month growth was 13.63%. In the first seven months of 2025, cumulative revenue reached NT$4.05 trillion, a year-on-year increase of 17.62%. The company stated, it expects third-quarter revenue to achieve both quarter-on-quarter and year-on-year growth. Strong demand from the artificial intelligence infrastructure and consumer electronics sectors later this year may provide key support for the company's performance. AI Server Demand Remains a Highlight Sales data released by the company shows that, year-on-year, in July, the "cloud network product category" grew strongly compared to the same period last year, while the "computer terminal product category" was roughly flat compared to the same period last year, and the "components and other product category" and "consumer smart product category" showed slight declines compared to the same period last year. Month-on-month, the "computer terminal product category" and "consumer smart product category" performed strongly, while the "components and other product category" saw significant growth, and the "cloud network product category" remained flat compared to the previous month. From January to July, the "cloud network product category" and "components and other product category" grew strongly compared to the same period last year, the "computer terminal product category" showed significant growth, while the "consumer smart product category" remained roughly flat. Looking ahead to the third quarter, Hon Hai stated that "cloud network products" will maintain a strong growth trend, and "ICT products" will enter the peak season in the second half of the year, with revenue gradually warming up. Overall operations in the third quarter will show "quarter-on-quarter" and "year-on-year" performance, but close attention must still be paid to the impact of global political and economic situations and exchange rate fluctuations. Hon Hai Forms Stock Swap Alliance with Dongyuan, Goldman Sachs Optimistic About Doubling AI Revenue Next Year The slowdown in Hon Hai's revenue growth is mainly related to market concerns brought about by geopolitical risks. Under the shadow of tariffs, the robust development of artificial intelligence is the clearest growth engine for Hon Hai and the entire industry. Some of the world's largest technology companies are ramping up their AI competition with unprecedented intensity. Microsoft, Amazon, Alphabet, and Meta Platforms are expected to collectively invest over USD 344 billion in capital expenditures this year, most of which will be used to build AI data centers As a major assembly partner for NVIDIA's AI servers, Hon Hai is at the core of this wave. According to a previous article by Jianwen, Hon Hai announced a strategic cooperation with TECO Electric and Machinery Co., Ltd., where both parties will work together to create a one-stop AI data center infrastructure overall solution, integrating Hon Hai's advantages in AI servers and TECO's expertise in electromechanical engineering. Goldman Sachs stated, this cooperation will significantly enhance Hon Hai's competitiveness in the AI server field, with expected revenue growth of 110% and 59% year-on-year in 2025 and 2026, respectively. They also maintain a "buy" rating for Hon Hai, with a target price of NT$242, indicating a potential upside of 41.1% from the current level. Apple Demand Remains Strong In addition to the AI business, the robust demand from its long-term major client Apple Inc. also provides another layer of assurance for Hon Hai. Apple recently announced its fastest quarterly revenue growth in over three years, driven by strong demand in the Chinese market. As the main assembly factory for Apple's iPhone product line, Hon Hai is expected to benefit from Apple's positive momentum. Apple is optimistic about the sales outlook for the current quarter, expecting a year-on-year growth in the mid to high single digits. This positive guidance suggests that the peak demand for consumer electronics in the second half of the year will provide a solid foundation for Hon Hai's revenue