By Yimou Lee and Faith Hung
TAIPEI (Reuters) -Apple supplier Foxconn beat expectations on Wednesday with a 6% quarter-over-quarter net profit rise, driven by soaring demand for AI servers, and stuck to its forecast of significant full-year revenue growth .
The world’s largest contract electronics manufacturer expects robust demand for artificial intelligence servers to continue driving growth in the fourth quarter.
Foxconn said the development schedule for AI semiconductor leader Nvidia’s (NASDAQ:) GB200 chip was on track, and product deliveries will begin in the fourth quarter in small volumes, rising in early 2025.
“If the schedule remains unchanged, the performance of the entire AI server segment could be better than originally estimated,” said James Wu, vice president and spokesperson for Foxconn.
Wu highlighted Foxconn’s leading position in the AI server market, which he said accounts for more than 40% of the global market share, adding that its capacity and technology would not be easily challenged by competitors.
“That won’t change in the short term,” he said.
The Taiwanese company said net profit for the April-June quarter rose to T$35.05 billion ($1.09 billion), compared with T$33 billion in the same period last year.
That was better than the average analyst estimate of T$34.29 billion.
It was the fourth quarterly profit in a row for the company.
Foxconn said AI servers made up more than 40% of its server business in the second quarter and predicts that “AI servers should soon become Foxconn’s next trillion-dollar revenue product” in Taiwan dollars.
The company also wants to replicate the success it has had with iPhone production with the electric vehicle (EV) sector. The call said ongoing talks with two traditional carmakers in Japan would be completed 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 “flat” 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 third-quarter revenue to grow significantly from a year earlier, although revenue from smart consumer electronics, including smartphones, was likely to remain flat.
Foxconn, formally called Hon Hai Precision Industry Co Ltd, expects its business to gradually pick up in the second half as many electronics suppliers, including Apple (NASDAQ:), usually release new products before the year-end holiday season.
Ahead of the earnings release, Taipei-based KGI Securities revised its sales forecast for Foxconn this year, saying strong demand for new iPhones and AI servers could support better-than-expected second-half prospects.
Foxconn shares closed 2.5% higher ahead of the results announcement.
