Foxconn Reports Strong Quarterly Profit Amid AI Server Boom

Foxconn, the world’s largest contract electronics maker and a key Apple supplier, reported a 6% increase in quarterly net profit, reaching T$35.05 billion ($1.09 billion) for the April-June period.

This surpasses analysts’ expectations and continues the company’s trend of rising profits, marking the fourth consecutive quarterly increase.

Growth Drivers:

• AI Servers: Robust demand for AI servers has significantly contributed to Foxconn’s growth. The company anticipates this trend to continue into the fourth quarter and beyond. AI servers accounted for over 40% of Foxconn’s server business in the second quarter.
• Nvidia GB200 Chip: Foxconn confirmed that Nvidia’s GB200 chip development is on schedule, with initial deliveries expected in small volumes in the fourth quarter and increasing in early 2025. This development is projected to enhance the performance of the AI server segment.

Market Position and Future Outlook:

• AI Market Share: Foxconn holds over 40% of the global market share in AI servers, which it claims will remain strong due to its leading capacity and technology.
• Trillion-Dollar Revenue Product: The company forecasts that AI servers will soon become a trillion-dollar revenue product in Taiwan dollar terms.

Diversification and New Ventures:

Foxconn is also focusing on expanding its success from iPhone manufacturing into the electric vehicle (EV) sector.

Ongoing discussions with two traditional Japanese car makers are expected to be finalized by the end of the year.

Smartphone Business and Revenue Forecast:

• Smartphone Sector: Foxconn’s outlook for its smartphone business remains flat due to a high base from the first half of last year, but it expects a better performance in the second half of this year compared to 2023.
• Revenue Projections: The company anticipates significant revenue growth in the third quarter compared to the previous year, although revenue from smart consumer electronics, including smartphones, is expected to be flat.

Foxconn Stock Performance:

Ahead of the earnings announcement, Foxconn’s shares closed up 2.5%, reflecting positive market sentiment and revised sales forecasts.

Analysts, including KGI Securities, have adjusted their projections upward, citing strong demand for new iPhones and AI servers as key factors supporting a favorable outlook for the year’s second half.