Foxconn, the world’s largest contract electronics manufacturer and a key supplier for Apple, reported a stronger-than-expected 6% increase in quarterly net profit, fueled by the surging demand for AI servers. The Taiwanese company announced that its net profit for the April-June quarter rose to T$35.05 billion ($1.09 billion), surpassing analysts’ estimates of T$34.29 billion. This marks the fourth consecutive quarterly profit rise for Foxconn.
The company attributed this growth to the booming AI market, with AI servers comprising more than 40% of its server business in the second quarter. Foxconn’s leadership in the AI server market was highlighted by Vice President and spokesman James Wu, who stated that the company holds more than 40% of the global market share in this segment. Wu also noted that Foxconn’s advanced capacity and technology would continue to dominate the market, with competition unlikely to pose a significant challenge in the near term.
Foxconn also confirmed that the development of Nvidia’s GB200 chip, a key component in AI servers, is progressing on schedule, with product deliveries expected to start in the fourth quarter and ramp up in early 2025. The company anticipates that AI servers will soon become a trillion-dollar revenue product in Taiwan dollar terms.
In addition to its AI business, Foxconn is eyeing expansion in the electric vehicle (EV) sector, aiming to replicate its success with iPhone manufacturing. The company revealed that it is in advanced talks with two traditional car manufacturers in Japan, with deals expected to be finalized this year. However, Foxconn remained cautious about its smartphone business, forecasting that revenue from smart consumer electronics, including smartphones, would likely remain flat in the third quarter compared to the previous year.
Foxconn’s positive earnings report was preceded by an upward revision in its sales forecast by Taipei-based KGI Securities, which cited strong demand for new iPhones and AI servers as drivers for a better-than-expected outlook in the second half of the year. Following the earnings announcement, Foxconn’s shares closed up 2.5%.
Featured Image courtesy of The Malaysian Reserve
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