Key facts
- Foxconn reported a 40% year-on-year increase in second-quarter revenue.
- AI demand drove sales, compensating for declines in consumer electronics and computing products.
- The company expects AI rack shipments to maintain momentum in the current quarter.
- Foxconn's CEO stated that Nvidia's new modular AI server platform will likely help Foxconn increase its market share.
Foxconn, a key supplier to Nvidia, has reported a significant 40% increase in quarterly sales, largely driven by robust demand for AI servers. The company's rotating CEO, Michael Chiang, expressed confidence that Nvidia's new modular AI server platform will further enhance Foxconn's market position. Despite concerns about overcapacity and rising competition in the AI infrastructure sector, Foxconn believes its extensive manufacturing scale and integrated supply chain provide a competitive advantage.
Hon Hai Precision Industry Co., known globally as Foxconn, saw its revenue reach NT$2.51 trillion ($79 billion) in the second quarter, surpassing analyst expectations. This growth was primarily fueled by its cloud and networking products division, which benefited from AI-related demand, offsetting a slight decline in consumer electronics and computing products. The company's June revenue alone hit NT$1.33 trillion ($45 billion), marking a 21.6% year-on-year increase.
Major technology firms like Alphabet, Amazon, Meta, and Microsoft are collectively investing approximately $725 billion in AI this year, underscoring the strong demand for AI hardware. Foxconn, which assembles server racks housing Nvidia's accelerators and is also a major assembler of Apple's iPhones and MacBooks, projects that AI rack shipments will continue to grow. The company has stated that its overall operations are expected to see growth both quarter-on-quarter and year-on-year, with consumer electronics demand entering its peak season.
While the company faces some supply chain constraints, such as a shortage of memory chips, executives believe this will not significantly impact demand for its premium products. Foxconn is also diversifying its AI infrastructure efforts by collaborating with Intel and SambaNova on Xeon processor-based systems. The company currently claims about 40% of the global AI rack assembly market.