- Foxconn’s quarterly net profit rose by 6%, exceeding expectations.
- Strong demand for AI servers drives growth, with continued momentum expected into Q4.
- Foxconn holds over 40% of the global AI server market share.
- Nvidia’s GB200 chip development is on track, with initial deliveries set for Q4 2024.
- Foxconn’s EV sector expansion includes ongoing talks with two Japanese automakers.
- The smartphone business is expected to be flat, but growth is anticipated in the year’s second half.
- KGI Securities has upgraded Foxconn’s sales forecast due to robust demand for AI servers and new iPhones.
- Foxconn’s shares increased by 2.5% following the earnings report.
Main AI News:
Foxconn, the world’s top contract electronics manufacturer, posted a 6% rise in quarterly net profit, driven by soaring demand for AI servers. This performance surpassed market expectations and bolstered the company’s forecast for significant full-year revenue growth.
The company expects strong demand for AI servers to continue into the fourth quarter, with the development of Nvidia’s GB200 chip progressing on schedule. Initial deliveries are set to begin in the fourth quarter, with larger volumes anticipated by early 2025.
Foxconn’s vice president and spokesperson, James Wu, emphasized the company’s leadership in the AI server market, which holds over 40% of the global market share. Wu noted that Foxconn’s advanced technology and production capacity provide a solid competitive edge.
For the April-June quarter, Foxconn reported a net profit of T$35.05 billion ($1.09 billion), up from T$33 billion the previous year, beating analysts’ predictions of T$34.29 billion. This marks the fourth straight quarter of profit growth.
AI servers now account for over 40% of Foxconn’s server business, and the company expects this segment to become a trillion-dollar revenue generator in Taiwan dollar terms.
Foxconn is also pursuing growth in the electric vehicle (EV) sector, aiming to replicate its success in iPhone manufacturing. The company is in advanced talks with two Japanese automakers, with agreements expected by year-end, though details remain undisclosed.
On the smartphone front, Foxconn projects a “flattish” performance due to a high base last year but anticipates better results in the second half of this year. While third-quarter revenue is expected to grow significantly year-over-year, smart consumer electronics, including smartphones, may see flat growth.
Known officially as Hon Hai Precision Industry Co Ltd, Foxconn anticipates a gradual operational pickup in the latter half of the year, supported by product launches from key vendors like Apple before the holiday season.
KGI Securities recently upgraded Foxconn’s sales forecast, citing strong demand for new iPhones and AI servers. Foxconn’s shares gained 2.5% ahead of the earnings report.
Conclusion:
Foxconn’s quarterly solid performance, driven by the booming AI server market, positions the company as a dominant force in this emerging sector. With its significant market share and advanced technology, Foxconn is well-placed to capitalize on the growing demand for AI infrastructure. The company’s strategic expansion into the electric vehicle market and sustained performance in its core electronics manufacturing business suggest that Foxconn is diversifying its revenue streams while maintaining its leadership in critical areas. This could signal increased competition and investment in AI and EV markets, potentially reshaping the landscape as Foxconn strengthens its position in these high-growth industries.
