Apple (AAPL.O), opens new tab supplier Foxconn (2317.TW on Wednesday surpassed expectations with a 6% rise in quarterly net profit, driven by a boom in demand for AI servers, and stood by its forecast for full-year revenue to grow significantly.

The world's largest contract electronics maker said it expected robust demand for artificial intelligence servers to continue to boost growth into the fourth quarter.

Foxconn said the development schedule for AI semiconductor leader Nvidia's (NVDA.O), opens new tab GB200 chip was on track, adding product delivery will start in the fourth quarter in small volumes, which would rise in early 2025.

"If the schedule remains unchanged, the performance of the entire AI server segment may be better than originally estimated," Foxconn vice president and spokesman James Wu said.

Wu emphasized Foxconn's leading position in the AI server market, which he said accounted for than 40% of the global market share, adding its capacity and technology would not be easily challenged by competitors.

"That will not be changed in a short time," he said.

The Taiwanese company said net profit for the April-June quarter rose to T$35.05 billion ($1.09 billion) from T$33 billion in the same period the previous year.

That beat analysts' average estimate of T$34.29 billion.

It was the fourth consecutive quarterly profit rise for the company.

Foxconn said AI servers made up more than 40% of its server business in the second quarter and it forecast "AI servers should soon become Foxconn's next trillion-dollar revenue product" in Taiwan dollar terms.

The company also wants to replicate the success it has had with manufacturing iPhones with the electric vehicles (EV) business. It said on the call that ongoing talks with two traditional car makers in Japan would be finalised this year.

"Rub your eyes and wait," Wu said, without naming the companies.

On the full-year outlook for its smartphone business, Foxconn said it remained "flattish" due to a higher base in the first half of last year, adding that the outlook for the second half of this year is better than the corresponding period in 2023.

The company expected revenue for the third quarter to grow significantly from a year earlier, although revenue from smart consumer electronics including smartphones was likely to be flat.

Formally called Hon Hai Precision Industry Co Ltd, Foxconn has expected its operations to pick up gradually in the second half as many electronics vendors, including Apple, usually release new products ahead of the year-end holiday season.

Prior to the earnings announcement, Taipei-based KGI Securities revised up its sales forecast for Foxconn this year, saying strong demand for new iPhones and AI servers could support a better-than-expected outlook in the second half.

Shares of Foxconn closed up 2.5% ahead of the results announcement.

By: DocMemory
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