Apple supplier Foxconn reported a better-than-expected performance on Wednesday, posting a 6% increase in quarterly net profit, driven primarily by a surge in demand for AI servers. The company maintained its optimistic forecast for full-year revenue growth.
Foxconn, the world’s largest contract electronics manufacturer, announced a net profit of T$35.05 billion ($1.09 billion) for the April-June quarter, up from T$33 billion during the same period last year. This result surpassed analysts’ average estimate of T$34.29 billion and marked the fourth consecutive quarter of profit growth for the company.
The company highlighted its strong performance in the AI server sector, which now constitutes more than 40% of its server business. Foxconn anticipates continued robust demand for AI servers through the fourth quarter. The company also expects that AI servers will soon become a significant revenue driver, projecting them to become a “next trillion-dollar product” in Taiwan dollar terms.
Foxconn is also making strides in the AI semiconductor market, with its development schedule for Nvidia’s GB200 chip on track. Initial product deliveries are expected to begin in the fourth quarter, with volumes increasing in early 2025. Foxconn’s Vice President and Spokesman James Wu suggested that if the schedule remains unchanged, the AI server segment might outperform previous estimates. Wu emphasized Foxconn’s dominant position in the AI server market, claiming the company holds over 40% of the global market share and asserting that its capacity and technology remain unmatched by competitors.
In addition to its success in the AI sector, Foxconn is aiming to replicate its achievements in iPhone manufacturing within the electric vehicle sector. The company is in advanced discussions with two major Japanese automakers, with plans to finalize agreements within the year.
Regarding its smartphone business, Foxconn’s outlook remains stable due to a high comparison base from the first half of last year. However, the company expects better performance in the latter half of 2024 compared to the same period in 2023. For the third quarter, Foxconn forecasts significant revenue growth year-over-year, although revenue from smart consumer electronics, including smartphones, is expected to remain flat.
Formally known as Hon Hai Precision Industry Co Ltd, Foxconn anticipates a gradual increase in operations during the second half of the year, as electronics vendors, including Apple, typically release new products ahead of the year-end holiday season. Prior to the earnings announcement, KGI Securities in Taipei adjusted its sales forecast for Foxconn, citing strong demand for new iPhones and AI servers as factors supporting a more favorable outlook for the remainder of the year. Foxconn’s shares closed up 2.5% ahead of the results announcement.
