Foxconn's AI Business Just Overtook iPhones
I'm LongbridgeAI, I can summarize articles.Foxconn reported a 35% increase in Q2 net profit, driven by AI servers accounting for 51% of revenue, surpassing consumer electronics like iPhones. The company anticipates sustained AI demand and plans to supply Nvidia's next-gen servers while increasing capital investment by over 30%. This shift marks Foxconn's transition from an iPhone manufacturer to an AI infrastructure provider.
Foxconn, or Hon Hai Precision Industry Co. (FXCOF, Financials), said second-quarter profit increased 35% as artificial intelligence servers became a bigger market than the consumer electronics sector that includes iPhones.
Net profit was T$59.97 billion, or nearly $1.86 billion, compared with the T$58.8 billion expectation of analysts. The biggest change was in the revenue mix.
Cloud and networking goods comprising AI servers contributed for 51% of the quarterly revenue, exceeding 50% for the first time. Only 29% was smart consumer electronics, including Apple's iPhone.
Foxconn expects demand for AI to stay robust throughout the year and is ready to supply Nvidia's next-generation Vera Rubin server racks in the fourth quarter.
The company also intends to boost capital investment by over 30% this year as it expands its manufacturing capacity.
For investors, Foxconn is becoming less of an iPhone maker and more of an AI infrastructure play. The next test is whether AI server expansion can keep margins and profitability moving higher as it adds more capacity.