Foxconn Posts Higher Profit, Record Revenue on AI Server Demand — Update

By Sherry Qin

Foxconn Technology Group reported higher quarterly net profit as its revenue rose to a record on robust demand for artificial-intelligence servers.

The world's largest contract electronics maker, known for assembling Apple's iPhones, said Wednesday that its second-quarter net profit was 35.045 billion New Taiwan dollars, equivalent to US$1.08 billion, up from NT$33.00 billion a year earlier. That beat the estimate of NT$33.73 billion in a poll of analysts by FactSet.

Quarterly revenue rose 19% to NT$1.551 trillion--a record for the period--supported by its cloud and networking products segment amid strong AI server demand.

The Taiwanese company, formally known as Hon Hai Precision Industry, has been taking steps in recent years to diversify its lines of business. It now plays an increasingly important role in building AI servers for U.S. giants such as Amazon and Nvidia.

AI server sales surged 60% sequentially in the second quarter, making up more than 40% of the revenue in the cloud and networking business. The segment is Foxconn's second-biggest source of revenue after consumer electronics and has accounted for a growing share of the company's overall sales in the recent quarters.

Investors betting on an AI boom have sent the company's stock soaring nearly 80% this year, outperforming a more than 20% jump for the broader Taiwan market. Shares in Foxconn closed 2.5% higher ahead of the results.

Foxconn maintained its upbeat guidance for "significantly positive growth" this year, citing demand for AI servers, which will likely improve quarter by quarter in the second half of the year.

In an earnings call, Foxconn spokesperson James Wu said the company expects its consumer electronics segment to deliver strong growth in the third quarter from the previous quarter, adding that it "has already started preparing for new products."

Analysts have said that Apple's new iPhone with AI features, due to be launched in September, could spur consumers to upgrade their smartphones and support Foxconn's revenue in the third quarter.

Write to Sherry Qin at sherry.qin@wsj.com

(END) Dow Jones Newswires

August 14, 2024 04:40 ET (08:40 GMT)

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