Foxconn, a key supplier for Apple, reported a 6% rise in quarterly net profit on Wednesday, exceeding market expectations. The world’s largest contract electronics manufacturer attributed the growth to surging demand for artificial intelligence (AI) servers and reaffirmed its forecast for significant revenue growth this year.
The Taiwanese company, officially known as Hon Hai Precision Industry Co Ltd, noted that the demand for AI servers is expected to continue driving growth into the fourth quarter. Foxconn highlighted that the development of Nvidia’s GB200 chip, a leading AI semiconductor, is on schedule, with initial product deliveries set for the fourth quarter and ramping up in early 2025.
James Wu, Foxconn’s vice president and spokesman, stated that if the development timeline holds, the performance of the AI server segment could surpass previous estimates. Wu also emphasized Foxconn’s dominant position in the AI server market, where it holds more than 40% of the global market share. He confidently added that this leadership is unlikely to be challenged in the near future.
For the April-June quarter, Foxconn’s net profit increased to T$35.05 billion ($1.09 billion) from T$33 billion in the same period last year, beating analysts’ expectations of T$34.29 billion. This marks the company’s fourth consecutive quarter of profit growth.
AI servers accounted for over 40% of Foxconn’s server business in the second quarter. The company predicted that AI servers could soon become a trillion-dollar revenue generator in Taiwan dollar terms. Additionally, Foxconn is looking to replicate its success in smartphone manufacturing with its electric vehicle (EV) business. The company is currently in discussions with two Japanese automakers, with deals expected to be finalized by the end of the year.
Regarding its smartphone business, Foxconn maintained a “flattish” outlook for the full year, citing a high base in the first half of the previous year. However, it expects the second half of this year to perform better than the same period in 2023, with significant revenue growth anticipated in the third quarter, though revenue from smart consumer electronics, including smartphones, may remain flat.
As Foxconn prepares for the year-end holiday season, it expects a gradual pick-up in operations, with many electronics vendors, including Apple, set to launch new products. Ahead of the earnings announcement, KGI Securities in Taipei revised its sales forecast for Foxconn, citing strong demand for new iPhones and AI servers as key factors supporting a better-than-expected outlook for the second half of the year. Foxconn shares closed up 2.5% before the earnings results were released.
