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Foxconn's Second-Quarter Earnings Surge on AI Boom

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Foxconn's Second-Quarter Earnings Surge on AI Boom

Hon Hai Precision Industry (TPE:2317) ended Wednesday trading in Taiwan around 3% in the green as its profit and revenue for the second quarter surged from a year earlier due to the growing popularity of artificial intelligence technologies.

The world's largest electronics manufacturer said net profit attributable to the owners rose 35% year on year to NT$60 billion, with earnings per share increasing to NT$4.27 from NT$3.19. Hon Hai, also known as Foxconn, posted a 41% year-on-year jump in its revenue to NT$2.53 trillion.

Against this backdrop, the top iPhone assembler expects significant quarterly growth in the third quarter, its traditional peak season. Year-over-year increases are also expected for the three-month period, with high double-digit growth seen for cloud and networking products and AI server rack shipments.

"Amid significant market interest regarding the mass production progress of AI and smart consumer electronics products for key clients, Foxconn Rotating CEO Michael Chiang stated the Group is seeing sustained volume growth in AI server racks driven by continued capital expenditure expansion among cloud service providers," the company said.

Over the next year, Foxconn's Chiang said demand for AI production capacity will remain "very strong," and so the company expects capex to increase in Taiwan, Mexico and Vietnam, among other locations. In the US, the company said it will continue to build up its research, development and manufacturing capacity in Texas, Wisconsin, Ohio and California in response to American localization needs.

"Regarding the ROE and operating profit margin indicators, Chiang stated the ROE for the first half of this year reached 6.21%, an increase of 0.73 percentage point compared to the same period last year, reaching half of the Group's 12% target, with further room for improvement. Operating profit margin - at 3.67% in the January-June period, improving 0.67 percentage point year-on-year - not only met the Group's 3% target, but should also exceed last year's full-year level of 3.2%."

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