Hon Hai's second quarter report meets market expectations, with strong demand for AI servers

AI server and iPhone business "blossom together," Hon Hai's second-quarter growth remains robust, with strong demand expected to continue next quarter. On July 5th, Hon Hai Precision announced that, benefiting from strong demand for AI servers and iPhones, the company's second-quarter revenue increased by 15.8% year-on-year, reaching NT$1.8 trillion, which is basically in line with market expectations. It is anticipated that revenue in the next quarter will achieve both sequential and year-on-year growth. The demand for AI supply chains remains strong, primarily due to stable spending from cloud service providers. The increase in iPhone production orders mainly stems from clients' demand for expedited delivery ahead of potential tariff impacts. However, geopolitical uncertainties are posing challenges for Hon Hai. Due to potential impacts from trade tensions, the company lowered its full-year revenue guidance in May. AI Demand Supports Performance Growth Hon Hai's first-quarter revenue growth is mainly attributed to the strong performance of its two major business segments: AI servers and iPhones. As a major manufacturer of NVIDIA AI accelerator servers, Hon Hai directly benefits from the global AI infrastructure construction boom. The analyst team at GF Securities believes that as major cloud service providers continue to increase investments related to AI, the AI supply chain will maintain a strong growth trend, providing a stable order base for contract manufacturers like Hon Hai. In terms of the iPhone business, market demand for new models has exceeded expectations. Especially before the implementation of potential tariff policies, the demand for expedited delivery from clients has increased, bringing additional order opportunities for Hon Hai. Moreover, Apple's performance in the Chinese market provides significant support for Hon Hai's revenue growth. Research firm Counterpoint data shows that, driven by solid demand for the iPhone 16 Pro and Pro Max models, Apple's smartphone sales in China grew by 8% in the second quarter.