Taiwan's Foxconn reports 35% rise in Q2 profit on AI demand, beats forecasts

TAIPEI, Aug 12 (Reuters) - Taiwan's Foxconn 2317.TW, the world's largest contract electronics maker, reported on Wednesday a 35% rise in second-quarter profit, beating analyst forecasts, on continued strong demand for AI, which it predicted would drive growth this year. Net profit for the April to June period for Nvidia's NVDA.O biggest server maker and Apple's AAPL.O top iPhone assembler was T$59.97 billion ($1.86 billion), versus an LSEG consensus estimate of T$58.8 billion and compared with T$44.4 billion a year earlier. In an earnings release, it stuck to its previous forecast of "strong" growth for revenue this year and said it also saw strong AI demand driving growth throughout the year. The company does not give numeric forecasts. The company, formally called Hon Hai Precision Industry, said its cloud and networking products segment, which includes AI servers, accounted for 51% of second-quarter revenue, exceeding 50% for the first time, while its smart consumer electronics products segment, which includes iPhones, accounted for 29%. "AI-related business performance will continue to grow in the third quarter. Combined with ICT products entering their peak season in the second half of the year, we expect significant quarter-on-quarter growth and strong year-on-year growth," said rotating CEO Michael Chiang. When asked about updates on Nvidia's latest Vera Rubin server products that Foxconn manufactures, Chiang said the AI server racks would enter mass-production preparation in the third quarter, with shipments expected to begin in the fourth quarter. "We expect production volumes to increase gradually over the next several quarters, and it (Vera Rubin) will become our major product next year," he said. While customer demand remains very strong, Chiang cautioned that the key determinant for the overall AI server rack market next year will be how much CoWoS capacity chip companies are able to secure. Foxconn's customers, including Nvidia, rely heavily on manufacturing by Taiwan's TSMC, the world's largest contract chipmaker. CoWoS, or Chip on Wafer on Substrate, is a key advanced packaging technology developed by TSMC used in AI chip production that has been constrained by tight capacity amid booming AI demand. "The market currently expects CoWoS capacity to grow by more than 50% next year, but how much of that can ultimately be translated into shipments of next-generation AI server racks will depend on chip supply," Chiang said. Foxconn expects its capital expenditure to continue growing and forecasts a 30% increase in 2026 from a year earlier. In July, Foxconn reported a 40% year-on-year jump in second-quarter revenue. Most of the iPhones Foxconn makes for Apple are assembled in China, but it now produces the bulk of those sold in the United States in India. The company is also building factories in Mexico and Texas to make AI servers for Nvidia. Foxconn has also been looking to expand its footprint in electric vehicles. The company's shares have risen 17% so far this year, underperforming the broader Taiwan index's 57% gain. .TWII Foxconn shares closed 2.7% higher on Wednesday ahead of the earnings release. ($1 = 32.1990 Taiwan dollars)

Taiwan's Foxconn reports 35% rise in Q2 profit on AI demand, beats forecasts

Q2 profit beats forecasts on AI demand

AI servers drive more than half of revenue

Capital spending and broader business outlook

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