AI demand to drive Foxconn’s Q2 profit growth

Industry Insights from Next Move Strategy Consulting

Taiwan’s Foxconn, the world’s leading contract electronics manufacturer, is set to announce on Thursday that its second-quarter profits increased by 11%, driven by sustained strong demand for artificial intelligence servers.

According to LSEG’s consensus estimate, net profit for April–June for Apple’s primary iPhone assembler and Nvidia’s server manufacturer likely reached T$38.8 billion ($1.30 billion), up from T$35.05 billion in the same period last year.

Foxconn Reports Record Q2 Revenue Amid AI Demand, Warns of Geopolitical Risks

Foxconn, officially known as Hon Hai Precision Industry, reported record second-quarter revenue last month, fueled by robust demand for artificial intelligence products. However, the company also cautioned about potential challenges from geopolitical tensions and fluctuating exchange rates.

While Foxconn’s strong manufacturing base in China positions it well for global supply, ongoing trade uncertainties could weigh on its outlook for the year. Nonetheless, a recent 90-day extension of the U.S.-China tariff truce provides some temporary relief.

The majority of iPhones that Foxconn assembles for Apple are produced in China, though most units sold in the United States are now manufactured in India. Additionally, the company is expanding its AI server production for Nvidia by constructing factories in Mexico and Texas.

Foxconn’s Outlook, EV Expansion, and Lordstown Facility Update

• Q3 Sales Outlook: In its July sales report, Foxconn indicated that the third quarter is expected to see year-on-year growth. The company does not provide specific numerical guidance but emphasized that the effects of "evolving global political and economic conditions" will require ongoing monitoring.

• Electric Vehicle Expansion: Foxconn is actively working to grow its presence in the electric vehicle (EV) sector, which it views as a key driver of future growth. However, the company has faced challenges in fully realizing these ambitions.

• Lordstown Factory Sale: Earlier this month, Foxconn announced a deal to sell its former car factory in Lordstown, Ohio, for $375 million, including the machinery. Despite the sale, the company plans to continue using the site to manufacture a broader range of products aligned with its strategic priorities.

Foxconn has been diversifying beyond its traditional role as an iPhone assembler. Last month, it entered a strategic partnership with industrial motor manufacturer TECO Electric & Machinery (1504.TW) to develop data centers.

Foxconn Earnings Call and Stock Performance

Foxconn will hold its earnings call in Taipei on Thursday at 3 p.m. (0700 GMT), during which it will provide an updated outlook for the year. So far in 2025, the company’s shares have climbed 7.9%, outperforming the broader Taiwan index’s 5.8% gain.

Conclusion

Foxconn’s strong performance in the second quarter underscores the pivotal role of artificial intelligence demand in driving growth for the electronics giant. While geopolitical uncertainties and global trade challenges remain, the company’s diversification into AI servers, electric vehicles, and data centers positions it well for future opportunities. As the primary assembler of Apple’s iPhone, Foxconn continues to demonstrate its ability to adapt and innovate, ensuring it remains a critical force in the evolving global technology supply chain.

Source: https://www.reuters.com/

Prepared by: Next Move Strategy Consulting