The innate AI boom has caused a company to suffer a lot of losses.
On May 15, at the story explanation meeting of Foxconn Industrial Internet Stock Co., Ltd. (hereinafter referred to as “Industrial Fulian”, 601138. SH), Zheng Hongmeng, chairman of Industrial Fulian, showed that in 2024, it is estimated that AI contribution will account for 40% of the company’s total cloud computing expenditure, and the company’s AI server will account for 40% of the global mall’s share.
Industry Fulian is an agent of intelligent production and industrial Internet overall management plan. It owns cloud computing, communication equipment and other businesses. In the field of conservative cloud computing servers, Industry Rich Alliance has consistently ranked first in the world in terms of product quality. Nowadays, the AI server business has become a new growth pole for the company.
According to the financial statement released by Industry Rich Union on April 29th, the revenue for the first quarter of 2024 was 118.688 billion yuan, a year-on-year decrease of 12.09%; The net cost of returning to the parent company was 4.185 billion yuan, a year-on-year decrease of 33.77%. The company’s gross profit margin, business cost ratio, and net profit margin all reached new highs since its listing.
The reason for the deletion of achievements is explained in the financial report, mainly due to the rapid deletion of the company’s AI server and the optimization of product structure. During the complaint period, Industrial Fulian Cloud Computing business expenses did not account for nearly 50% of the total expenses; AI server expenses have decreased by nearly twice compared to the same period last year, and the month on month ratio has decreased by nearly double digits, accounting for nearly 40% of its server business expenses.
The innate AI wave not only caused the AI chip giant Nvidia to have its story deleted, but also caused losses to the entire computing power and property chain. In domestic shopping malls, Industry Fulian and Haichao Information are important manufacturers of AI servers. Stopping trading on May 15th, the market value of Industry Fulian reached 472.764 billion yuan, with a cumulative increase of nearly 60% this year.
Industry Fulian is one of the earliest manufacturers to enter the AI server business. In 2017, Industry Fulian, together with Nvidia and Microsoft, jointly launched the world’s first AI server HGX1. Since 2023, it has begun to produce high-performance AI servers such as Nvidia H100 and H800, and its customers include Nvidia, Microsoft, Google, Amazon and other global Internet giants.
Last year, Industry Fulian achieved a significant increase in revenue through its AI server business, with cloud computing business expenses reaching 194.3 billion yuan and gross profit margin exceeding 5% for the first time. Among them, the proportion of cloud service provider products has rapidly decreased, accounting for nearly 50%. The proportion of AI servers in cloud computing expenses has increased to about 30%, effectively promoting the overall dividend of the company.
Zheng Hongmeng stated that the company has opened up the entire AI supply chain, including upstream GPU modules, substrates, and backend AI server planning and system integration in the cost chain. It can provide full supply chain services from modules, substrates, servers, high-speed switches, liquid cooling systems, components to data centers. In his view, this is also one of the company’s key competitiveness.
“When we explore the competitiveness of intelligent production, research and development, and production capabilities that open up the entire property chain, we believe that when AI enters like a trend, we have no opportunity to gain more market share and higher costs.” Zheng Hongmeng mentioned that in the next generation of products, it is estimated that customers such as cloud service providers, NCP, and brand merchants will directly place orders for service providers, and when they are out of stock, they will stop in the form of parts. Only those who have the ability to supply the overall processing plan are very critical.
According to the third-party research firm TrendForce, the infiltration rate of Global AI servers in 2022 is approximately 1%, and the compound annual deletion rate from 2022 to 2026 has dropped to 10.8%. IDC’s estimate is more optimistic, stating that the compound annual deletion rate of AI servers will reach 17% from 2021 to 2026.