Foxconn Posts 35% Profit Surge as AI Servers Overtake iPhone Assembly for First Time

Foxconn: AI servers now pass half of revenue

The company that assembles your iPhone now earns most of its money from AI servers. Phones are down to 29% of revenue. Foxconn crossed a line this quarter that it will not cross back. Its cloud and networking division, the one that builds AI servers, made up 51% of revenue in the three months to June. That is the first time the segment has passed half. Smart consumer electronics, the division that contains the iPhone, came to 29%. The profits followed. Net profit reached NT$59.97bn, about $1.86bn, up 35% on a year earlier and the company's highest ever for a second quarter. The quarter in numbers Consolidated sales hit NT$2.53 trillion, up 41% year on year and 19% on the previous quarter. Analyst forecasts were beaten on both profit and revenue. The cloud and networking share climbed fast. It was 48% in the first quarter, with computing at 15% and electronic components at 5%, per Taiwan's Central News Agency. Earnings per share came in at NT$4.27, against NT$3.19 a year earlier. First-half profit reached NT$109.89bn, up 27%. July was bigger still. Revenue that month jumped 54.2% to a record NT$946.5bn, Bloomberg reported. What the company is promising Rotating chief executive Michael Chiang framed the shift as structural rather than cyclical. Cloud investment, he told analysts, "will become the most critical growth driver for Hon Hai over the next few years". He drew a distinction that matters for a contract manufacturer. AI infrastructure demand is steady, unlike consumer electronics, which lives and dies by seasonal cycles. He also argued the buildout has barely started. Cloud providers and AI labs are the big buyers so far, while government and corporate adoption remains, in his words, in its infancy. The next platform is the near-term test. Nvidia's Vera Rubin racks enter mass-production preparation this quarter and ship in the fourth, and Chiang expects it to become Foxconn's major product next year. The share that is shrinking Here is the part the headline profit hides. Foxconn is winning a bigger market and losing position inside it. Morgan Stanley expects its high-end rack market share to fall to 39% this year, from 51% in 2025, according to the Wall Street Journal. Analysts put that down to buyers seeking alternative suppliers rather than to any drop in output. That diversification is visible everywhere. Microsoft is ordering hundreds of thousands of its own chips from TSMC, and every hyperscaler is doing some version of the same thing. Analysts have a second worry. As AI server designs standardise, the hardware risks becoming a commodity, which lowers the barrier for rival assemblers. Chiang rejected that reading outright. Standardisation, he said, "highlights the advantages of suppliers with scaled delivery and complete vertical integration". Record revenue, thinner margin The margin line is the quiet counterweight. Gross margin was 6.12%, down 0.21 percentage points on a year earlier. Operating margin did improve, to 3.75%, up 0.60 points. Net margin sat at 2.37%, slightly below last year. So the mix has changed but the economics have not. Assembling servers is still a business measured in single-digit gross margins, and volume is what pays for it. That is why the capacity plan is so large. Foxconn is expanding to hundreds of sites across 24 countries, close to double its earlier footprint, with new capacity in California, Texas, Wisconsin and Ohio. The ceiling nobody at Foxconn controls Chiang named the real constraint on 2027, and it is not demand. It is CoWoS, the advanced packaging technology from TSMC that AI chips depend on. The market expects that capacity to grow by more than 50% next year. How much of it turns into rack shipments, Chiang said, "will depend on chip supply". Foxconn does not control that supply. Neither does Nvidia, which is why the bottleneck keeps moving up the chain rather than disappearing. The iPhone half of the business has its own geography problem. Most iPhones are still assembled in China, though the bulk of those sold in America are now made in India. The market is not applauding Investors have seen these numbers and shrugged. Foxconn shares are up 17% this year, against a 57% gain for the broader Taiwan index. The doubt is not about this quarter. It is about who pays for the next one, and Alphabet, Meta, Microsoft and Amazon have now committed close to $2.4 trillion to AI over the coming years. Some of that is borrowed. Alphabet sold $25bn of bonds to help fund its build, and Nvidia has assembled a $500bn package with Wall Street to finance customers who cannot pay upfront. A tech rout in July was the market rehearsing that worry. One Federal Reserve official has asked whether AI is becoming too big to fail. Foxconn has answered the only question it can. It has proved the demand is real, that it can build to meet it, and that doing so has quietly turned an iPhone company into an AI infrastructure company. What it cannot prove is that the people writing the cheques will keep writing them.

Foxconn posts quarterly profit surge on AI server demand

Taipei (AFP) - Taiwanese tech hardware titan Foxconn reported on Wednesday a forecast-busting second quarter net profit, as exploding demand for artificial intelligence servers needed in data centres powered the company's growth. Foxconn, whose official name is Hon Hai Precision Industry, has gone beyond assembling low-margin iPhones to making AI servers for US tech giant Nvidia, along with electric vehicles and robots. The company said net profit for April-June reached NT$59.97 billion ($1.86 billion), up 35 percent from the previous year. The result beat estimates of NT$58.38 billion in a Bloomberg survey of analysts. Revenue for the three months hit NT$2.53 trillion, up 41 percent from a year ago. "AI infrastructure is driving growth," Foxconn said in its earnings announcement. The company forecast "strong YoY growth" in the current quarter and "a strong full-year outlook". Governments and tech giants are pouring huge sums into building data centres that can train and run AI tools such as chatbots, image generators and agents that can execute tasks. This has turbocharged business for Foxconn, which makes the servers used in the data centres.

Foxconn posts quarterly profit surge on AI server demand

The company said net profit for April-June reached NT$59.97 billion ($1.86 billion), up 35% from the previous year. Foxconn, whose official name is Hon Hai Precision Industry, has gone beyond assembling low-margin iPhones to making AI servers for US tech giant Nvidia, along with electric vehicles and robots. Taiwanese tech hardware titan Foxconn reported on Wednesday a forecast-busting second quarter net profit, as exploding demand for artificial intelligence servers needed in data centres powered the company's growth. Foxconn, whose official name is Hon Hai Precision Industry, has gone beyond assembling low-margin iPhones to making AI servers for US tech giant Nvidia, along with electric vehicles and robots. The company said net profit for April-June reached NT$59.97 billion ($1.86 billion), up 35% from the previous year. The result beat estimates of NT$58.38 billion in a Bloomberg survey of analysts. Revenue for the three months hit NT$2.53 trillion, up 41% from a year ago. "AI infrastructure is driving growth," Foxconn said in its earnings announcement. The company forecast "strong YoY growth" in the current quarter and "a strong full-year outlook". Governments and tech giants are pouring huge sums into building data centres that can train and run AI tools such as chatbots, image generators and agents that can execute tasks. This has turbocharged business for Foxconn, which makes the servers used in the data centres.

Foxconn Ramping Up Global AI Server Production to Ride Booming Cloud Investment -- Update

By Yang Jie in Tokyo and Sherry Qin in Singapore Foxconn Technology Group is expanding global production of artificial-intelligence servers and other components to capture surging cloud infrastructure investment while strengthening localized manufacturing in key markets. As hyperscalers continue to invest heavily in AI infrastructure, Foxconn has emerged as a critical supplier supporting the sector's rapid expansion. A surge in global cloud spending is now prompting the company to ramp up production across its advanced AI hardware lineup. Once mainly associated with manufacturing Apple's devices, the company has in recent quarters derived a meaningful portion of its revenue from building AI servers for industry leaders such as Nvidia. That has translated to historic financial results. Net profit climbed by a better-than-expected 35% to 59.97 billion New Taiwan dollars, equivalent to US$1.86 billion, in the second quarter as revenue surged 41% from a year earlier to NT$2.526 trillion. The company's server-related revenue recorded the strongest growth, accounting for more than half of total revenue. Foxconn's rotating chief executive, Michael Chiang, on Wednesday signaled confidence that global AI investment is intact, saying that surging capital expenditure from U.S. cloud providers will continue to fuel the company's revenue growth this year and next. He also highlighted the steady nature of demand for AI infrastructure, unlike the consumer-electronics industry, which relies heavily on seasonal cycles. While cloud service providers and AI model developers are the biggest AI infrastructure customers so far, Chiang said that government and corporate enterprise adoption is still in its infancy. The company expects this infrastructure buildout to expand for the next couple of years without any signs of slowing. To support this growth, Foxconn is expanding to over hundreds of sites across 24 countries, Chiang said, nearly doubling its earlier facilities, to reallocate capacity. Through its flexible "local for local" strategy, the company is expanding key hubs in Taiwan, Mexico, Vietnam and the U.S. to meet localized client demand, secure supply chains and insulate operations from geopolitical risks. This massive manufacturing expansion mirrors the broader market, which is scaling at an extraordinary rate as AI infrastructure investment continues to surge. Morgan Stanley analysts in a recent report described 2026 as a particularly strong year for downstream rack assemblers like Foxconn. Yet even as the total market expands, Foxconn faces mounting competition as cloud providers diversify their supply chains. Morgan Stanley projects Foxconn's high-end rack market share to fall to 39% this year from 51% in 2025, a shift analysts attribute to buyers seeking alternative suppliers rather than declining output from Foxconn itself. Industry analysts have also cautioned that as AI server designs become standardized across the industry, hardware could risk becoming commoditized, lowering barriers for alternative vendors. Chiang countered that assessment, saying that product standardization doesn't mean lower barriers to entry. "On the contrary, it highlights the advantages of suppliers with scaled delivery and complete vertical integration," he said. Pointing to Foxconn's one-stop assembly capabilities, extensive automation, and the fact that it also manufactures many of its own components, Chiang said the company expects its market share to increase even further on next-generation platforms.

Foxconn's AI Hardware Sales Drive Profit Beat

Foxconn Technology Group reported another strong quarter as it boosted production of servers and other tech hardware for the global artificial-intelligence buildout. The earnings beat shows how far Foxconn has come in becoming a critical supplier supporting the sector's rapid growth, as hyperscalers continue to invest heavily in AI infrastructure. Once mainly known as an assembler of Apple's devices, the world's largest contract electronics maker now derives a meaningful share of revenue from building AI servers for industry leaders such as Nvidia. The Taiwanese company, formally known as Hon Hai Precision Industry, said net profit rose 35% from a year earlier to 59.97 billion New Taiwan dollars, equivalent to US$1.86 billion, for the three months ended June. Analysts had expected NT$58.22 billion, according to a FactSet consensus estimate. Revenue jumped 41% to NT$2.526 trillion, more than earlier indicated, thanks to cloud and networking products, including AI servers, making up over half of total revenue for the first time. The smart consumer electronics segment encompassing smartphones contributed about one-third of the top line. Chairman Young Liu said last month that the continuing infrastructure buildout was being driven by a broad range of customers, from AI model developers and cloud service providers to governments and enterprises. Demand from cloud service providers is set to underpin Foxconn's outlook further, while adoption by governments and corporates remains in its infancy. Liu has said he expects this infrastructure buildout to run for at least three to five years more without any signs of slowing. Foxconn on Wednesday said it expects its AI server rack shipments to grow by a high double-digit percentage sequentially in the third quarter and more than double this year amid continued robust AI demand. Shares of Foxconn have rebounded from a first-quarter slump as investors shrugged off geopolitical uncertainties and focused on soaring demand for AI hardware, driven by hyperscalers' massive investments in recent months. The Taipei-listed stock hit an all-time high in June before losing some ground, taking gains this year to about 17%.