Foxconn posts better-than-expected profit on AI boom

Foxconn, Taiwan’s largest contract electronics manufacturer, reported a 19% rise in first-quarter profit on Thursday compared with the same period a year earlier, beating market expectations on the back of strong global demand for artificial intelligence products, News.Az reports, citing Reuters.

Net profit for January–March for Nvidia’s biggest server manufacturer and Apple’s top iPhone assembler came in at T$49.92 billion (US$1.58 billion), slightly above the LSEG consensus estimate of T$48.88 billion.

In its earnings release, the company maintained its previous forecast of “strong” revenue growth for the year and said it continues to see robust demand for AI servers.

Foxconn does not provide detailed numerical forecasts.

“AI remains the most important growth driver this year,” rotating CEO Michael Chiang said on an earnings call, adding that major cloud service providers have recently increased their capital expenditure plans for the year.

“AI is not a short-term theme, but a structural transformation of the industry,” he said.

The company expects capital expenditure to rise 30% this year from last year’s T$174 billion as it expands manufacturing capacity for AI servers.

Foxconn also said it expects AI server rack shipments to more than double over the full year. It added that demand for graphics processing unit (GPU) servers and application-specific integrated circuit (ASIC) servers—customized chips designed by major cloud providers—remains very strong, while general-purpose servers are also expected to grow due to expanding AI data center deployments.

Some cloud and networking products, particularly ASIC servers, have shifted to a consignment model in which customers supply key components rather than Foxconn purchasing them directly.

“We remain optimistic about our full-year performance,” Chiang said, while noting that geopolitical developments, supply chain changes, and raw material cost fluctuations could still affect the industry.

Foxconn, formally known as Hon Hai Precision Industry, reported a 30% year-on-year increase in first-quarter revenue in April.

While most iPhones Foxconn produces for Apple are assembled in China, the company now manufactures the majority of those sold in the United States in India. It is also building factories in Mexico and Texas to produce AI servers for Nvidia.

The company has been expanding into electric vehicles, which it views as a major future growth driver, although progress has been uneven. In August, Foxconn agreed to sell a former car factory in Lordstown, Ohio, for $375 million, including machinery, after acquiring the site in 2022 for EV production.

Foxconn shares have risen 6% so far this year, underperforming the broader Taiwan index’s 44% gain. Shares closed 2.6% lower on Thursday ahead of the earnings release.

News.Az 

By Nijat Babayev