Foxconn Sees AI Driving Growth as Q2 Profit Exceeds Forecast

Foxconn (2317.TW), the world’s largest iPhone assembler, reported second-quarter net profit of T$44.4 billion ($1.48 billion), surpassing the consensus estimate of T$38.8 billion, as strong demand for AI servers helped offset slower growth in smart electronics. The company on Thursday forecast a significant rise in third-quarter revenue, with AI server sales expected to jump more than 170% year-on-year.

Cloud and networking products, including servers, accounted for 41% of Q2 revenue, while smart consumer electronics contributed 35%. CEO Kathy Yang said, “AI has been the primary growth driver so far this year,” but cautioned that “close attention is needed due to the impact of changes in tariffs and exchange rates.”

Foxconn is increasing capital spending by more than 20% in 2025 to expand server production capacity at its facilities in Texas and Wisconsin. The company’s AI business benefits from rising demand as cloud computing giants such as Amazon (AMZN.O), Microsoft (MSFT.O), and Google (GOOGL.O) expand AI infrastructure.

Geopolitical uncertainty remains a risk, particularly from U.S.-China trade tensions, although a 90-day tariff truce has been extended. While most iPhones for Apple (AAPL.O) are assembled in China, production for the U.S. market has shifted mainly to India. Foxconn is also building factories in Mexico and Texas to manufacture AI servers for Nvidia (NVDA.O).

In its electric vehicle (EV) operations, Foxconn sold its former Lordstown, Ohio, factory for $375 million but will continue to occupy the site to produce cloud-related products. Initial production of its Model C EV for the U.S. market will take place in Taiwan.

Foxconn shares have risen 8.4% year-to-date, outperforming the broader Taiwan index (.TWII), which gained 5.2%, and closed up 0.5% on Thursday ahead of the earnings release.