Foxconn’s AI Server Boom Drives Q2 Profit Surge

• Foxconn posts 27% profit growth in Q2, driven by AI server demand, as cloud revenue surpasses iPhones for the first time.

AI Servers Overtake iPhones in Revenue Share

Taiwan-based Foxconn, officially known as Hon Hai Precision Industry, reported a 27% rise in second-quarter profit, fueled by strong demand for artificial intelligence servers. Net profit reached T$44.4 billion ($1.48 billion) for the April–June period, surpassing analyst expectations of T$38.8 billion. For the first time, revenue from its cloud and networking division, which includes AI servers, exceeded that of its smart consumer electronics segment. This shift marks a notable milestone for the company, long known as Apple’s primary iPhone assembler.

Foxconn’s earnings report indicated that AI server revenue is expected to grow over 170% year-on-year in the third quarter. While the company reaffirmed its full-year guidance for significant revenue growth, it did not provide specific figures. Executives cautioned that geopolitical tensions and currency fluctuations could impact future performance. Despite these concerns, the firm remains optimistic about continued momentum in AI-related infrastructure.

Global Expansion and Strategic Shifts

To support its growing AI server business, Foxconn is expanding manufacturing operations beyond China, with new facilities underway in Mexico and Texas. Although most iPhones sold in the U.S. are now assembled in India, China remains a key production hub for the company. A recent extension of the U.S.–China tariff truce for 90 days may offer temporary relief amid trade uncertainty. Foxconn’s diversification strategy includes not only geographic shifts but also sectoral expansion.

The company has been exploring opportunities in electric vehicles, though progress has been uneven. Earlier this month, Foxconn agreed to sell its Lordstown, Ohio factory—originally acquired for EV production—for $375 million, including equipment. Interestingly, it will continue to occupy the site, which may be repurposed to support AI data center operations. This move reflects a broader pivot toward infrastructure aligned with emerging computing demands.

Partnerships and Market Performance

Beyond manufacturing, Foxconn is investing in strategic collaborations to strengthen its AI ecosystem. In July, it partnered with TECO Electric & Machinery to co-develop data centers, signaling a deeper commitment to enterprise infrastructure. The company’s shares have risen 8.4% year-to-date, outperforming the broader Taiwan index’s 5.2% gain. Investors appear encouraged by Foxconn’s ability to adapt to shifting market dynamics and capitalize on AI growth.

Foxconn will host its earnings call in Taipei to provide further updates on its outlook and strategic direction. Analysts will be watching for commentary on how the company plans to navigate global headwinds while scaling its AI capabilities. The firm’s transformation from a consumer electronics assembler to a diversified tech manufacturer is gaining traction. Its evolving role in the AI supply chain could reshape its long-term positioning in the industry.