Managing Director, Zero One, Zero One

Vincent Fernando, CFA

Managing Director, Zero One

Zero One

Founded in 2015, Zero One produces independent investment research and provides corporate finance advisory services with a focus on both listed and private technology companies. Founder Vincent Fernando has over 20 years of experience in US and Asia capital markets.

Independent Investment Research

Equity Bottom-Up

Hon Hai Precision Industry / Equity Bottom-Up

<ul>
<li>Hon Hai reported 1Q24 revenue that fell 9% YoY, however the company reiterated its guidance for significant growth in 2024E and said growth now looks stronger than guided in March.</li>
<li>Hon Hai's cloud (including servers) business didn't grow as much as guided due to material shortages; but AI server revenue up 200% YoY and significant growth is guided for 2024E.</li>
<li>The traditional server market is rebounding, to grow double digits in 2024E. Hon Hai expects to take market share in 2024. Structural Long but near-term gains could be limited.</li>
</ul>


Hon Hai reported 1Q24 revenue that fell 9% YoY, however the company reiterated its guidance for significant growth in 2024E and said growth now looks stronger than guided in March.
Hon Hai's cloud (including servers) business didn't grow as much as guided due to material shortages; but AI server revenue up 200% YoY and significant growth is guided for 2024E.
The traditional server market is rebounding, to grow double digits in 2024E. Hon Hai expects to take market share in 2024. Structural Long but near-term gains could be limited.


Hon Hai: Traditional Server Market Now Adding to AI Growth; Expects Market Share Gains in 2024E

Tracking developments across tech supply chains, Tech Supply Chain Tracker

Tech Supply Chain Tracker

Tracking developments across tech supply chains

<ul><li>Post-China supply chain reevaluation in ASEAN offers strategic shifts and growth opportunities for businesses.</li><li>Peak season does not improve 3Q24 memory spot pricing, with overall market trends remaining stable.</li><li>Generative AI market set to reach $1.5T by 2030, with Taiwan leading in hardware development; software &amp; services also show promising future growth.</li></ul>

Post-China supply chain reevaluation in ASEAN offers strategic shifts and growth opportunities for businesses.Peak season does not improve 3Q24 memory spot pricing, with overall market trends remaining stable.Generative AI market set to reach $1.5T by 2030, with Taiwan leading in hardware development; software &amp; services also show promising future growth.

Tech Supply Chain Tracker (03-Sep-2024): Supply chain shifts in ASEAN post China

<ul>
<li>Hon Hai's 4Q23 profit beat consensus and management has become more bullish on 2024E revenue thanks to demand for AI servers.</li>
<li>Guided 40% YoY growth expected for AI servers; Separately, Hon Hai reportedly could have won a major AI server order from HP Enterprise according to Digitimes.</li>
<li>Hon Hai shares are finally moving; We see room for continued upside based on re-rating of the company's valuation. Positive news flow potential through Nvidia's GTC conference next week.</li>
</ul>


Hon Hai's 4Q23 profit beat consensus and management has become more bullish on 2024E revenue thanks to demand for AI servers.
Guided 40% YoY growth expected for AI servers; Separately, Hon Hai reportedly could have won a major AI server order from HP Enterprise according to Digitimes.
Hon Hai shares are finally moving; We see room for continued upside based on re-rating of the company's valuation. Positive news flow potential through Nvidia's GTC conference next week.


Hon Hai: Beat & Raise; Further Valuation Upside; AI Server Product Announcements Next Week

<ul><li>Silicon Shield 2.0 involves managing risks and building partnerships to secure supply chains in today's economic landscape.</li><li>AMD collaborates with ZT System engineers to simplify rising AI system complexity, enhancing efficiency and productivity.</li><li>Foxconn leverages AI server trading models to increase profits, while Taiwan's president calls for regional de-risking and trade partnerships to adapt to supply chain shifts. #Taiwan #trade #partnerships #supplychain. Innodisk's AI revenue surpasses 20%, foreseeing growth in revenue and profit in the second half of 2024. SK Hynix's revenue doubles in the US and China, attributed to increased AI demand in the first half of 2024. TSMC's new fab in Germany is expected to generate jobs and enhance wafer ecosystems in Europe.</li></ul>

Silicon Shield 2.0 involves managing risks and building partnerships to secure supply chains in today's economic landscape.AMD collaborates with ZT System engineers to simplify rising AI system complexity, enhancing efficiency and productivity.Foxconn leverages AI server trading models to increase profits, while Taiwan's president calls for regional de-risking and trade partnerships to adapt to supply chain shifts. #Taiwan #trade #partnerships #supplychain. Innodisk's AI revenue surpasses 20%, foreseeing growth in revenue and profit in the second half of 2024. SK Hynix's revenue doubles in the US and China, attributed to increased AI demand in the first half of 2024. TSMC's new fab in Germany is expected to generate jobs and enhance wafer ecosystems in Europe.

Tech Supply Chain Tracker (23-Aug-2024): Silicon Shield 2.0: supply chain security & diplomacy.

<ul>
<li>Hon Hai's Latest Key Take Aways -- No Slowdown for AI Server or Mobile Demand Indicated</li>
<li>Zhen Ding -- Delivers Higher Than Expected 2Q24 Growth; No Indication of AI Server or Mobile Slowdown</li>
<li>Taiwan AI Supply Chain Names Have Lagged Nvidia's Massive Rebound Since August 9th</li>
</ul>


Hon Hai's Latest Key Take Aways -- No Slowdown for AI Server or Mobile Demand Indicated
Zhen Ding -- Delivers Higher Than Expected 2Q24 Growth; No Indication of AI Server or Mobile Slowdown
Taiwan AI Supply Chain Names Have Lagged Nvidia's Massive Rebound Since August 9th


Hon Hai & Zhen Ding Show No Major AI Slowdown; Taiwan AI Supply Chain Names Lag Nvidia's Rebound

Taiwan

Hon Hai Precision Industry Co., Ltd. provides electronic manufacturing services for computers, communications, and consumer electronic products.  The Company's business operations include desktop and notebook PC assembly, connector production, cable assembly, PCB assembly, handset manufacturing, networking equipment, and other consumer electronic devices manufacturing.

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Hon Hai Precision Industry (2317 TT)

Tech Supply Chain Tracker (03-Sep-2024): Supply chain shifts in ASEAN post China

Colley Hwang discusses ASEAN expansion post-China, Peak season does not boost 3Q24 memory spot pricing, while Generative AI market expected to...

Tech Supply Chain Tracker

Hon Hai: Beat & Raise; Further Valuation Upside; AI Server Product Announcements Next Week

Hon Hai's delivers strong 4Q23 profit and bullish outlook on 2024 revenue driven by demand for AI servers. Potential major order from HP...

Vincent Fernando, CFA

Tech Supply Chain Tracker (23-Aug-2024): Silicon Shield 2.0: supply chain security & diplomacy.

Silicon Shield 2.0: AMD, Foxconn, Innodisk, SK Hynix, and TSMC leveraged AI and regional partnerships to secure and grow supply chains amidst...

Tech Supply Chain Tracker

Hon Hai & Zhen Ding Show No Major AI Slowdown; Taiwan AI Supply Chain Names Lag Nvidia's Rebound

Hon Hai and Zhen Ding report strong growth with no signs of slowdown in AI server or mobile demand, while Taiwan AI supply chain names have not...

Vincent Fernando, CFA

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

Hon Hai: Traditional Server Market Now Adding to AI Growth; Expects Market Share Gains in 2024E

​Hon Hai anticipates significant growth in 2024E, especially in AI server market despite material shortages. Traditional server market rebounding,...

Vincent Fernando, CFA

Tech Supply Chain Tracker (03-Sep-2024): Supply chain shifts in ASEAN post China

Colley Hwang discusses ASEAN expansion post-China, Peak season does not boost 3Q24 memory spot pricing, while Generative AI market expected to...

Tech Supply Chain Tracker

Hon Hai: Beat & Raise; Further Valuation Upside; AI Server Product Announcements Next Week

​Hon Hai's delivers strong 4Q23 profit and bullish outlook on 2024 revenue driven by demand for AI servers. Potential major order from HP...

Vincent Fernando, CFA

Tech Supply Chain Tracker (23-Aug-2024): Silicon Shield 2.0: supply chain security & diplomacy.

Silicon Shield 2.0: AMD, Foxconn, Innodisk, SK Hynix, and TSMC leveraged AI and regional partnerships to secure and grow supply chains amidst...

Tech Supply Chain Tracker

Hon Hai & Zhen Ding Show No Major AI Slowdown; Taiwan AI Supply Chain Names Lag Nvidia's Rebound

​Hon Hai and Zhen Ding report strong growth with no signs of slowdown in AI server or mobile demand, while Taiwan AI supply chain names have not...

Vincent Fernando, CFA

Hon Hai anticipates significant growth in 2024E, especially in AI server market despite material shortages. Traditional server market rebounding,...

Hon Hai's delivers strong 4Q23 profit and bullish outlook on 2024 revenue driven by demand for AI servers. Potential major order from HP...

Hon Hai and Zhen Ding report strong growth with no signs of slowdown in AI server or mobile demand, while Taiwan AI supply chain names have not...