Taiwan’s Foxconn reports 35% rise in Q2 profit on AI demand, beats forecasts

TAIPEI — Taiwan’s Foxconn reported a 35% increase in second-quarter profit, beating analysts’ expectations as strong demand for artificial intelligence servers continued to reshape the business of the world’s largest contract electronics manufacturer.

Foxconn, formally known as Hon Hai Precision Industry, posted net profit of T$59.97 billion ($1.86 billion) for the April-to-June quarter, up from T$44.4 billion a year earlier. The result exceeded an LSEG consensus estimate of T$58.8 billion, according to Reuters.

The company, Nvidia’s biggest server manufacturer and Apple’s leading iPhone assembler, maintained its forecast for “strong” revenue growth this year and said it expected robust AI demand to support growth throughout 2026. Foxconn does not provide numerical forecasts.

The results underscore the growing importance of AI infrastructure to Foxconn as the company expands beyond its long-established consumer electronics manufacturing business.

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AI Servers Take a Larger Share of Foxconn Revenue

Foxconn said its cloud and networking products division, which includes AI servers, accounted for 51% of second-quarter revenue. It was the first time the segment had contributed more than half of quarterly revenue, Reuters reported.

By comparison, the smart consumer electronics segment, which includes iPhones, accounted for 29% of revenue.

The shift comes as global technology companies continue investing heavily in the computing infrastructure needed to develop and operate artificial intelligence systems, boosting demand for servers equipped with advanced AI chips.

Foxconn had already reported in July that its second-quarter revenue jumped 40% from a year earlier.

Rotating CEO Michael Chiang said the company expects its AI-related operations to continue expanding in the third quarter.

“AI-related business performance will continue to grow in the third quarter. Combined with ICT products entering their peak season in the second half of the year, we expect significant quarter-on-quarter growth and strong year-on-year growth,” Chiang said, according to Reuters.

Nvidia Vera Rubin Servers Head Toward Production

Foxconn is also preparing to manufacture Nvidia’s latest Vera Rubin AI server products.

Chiang said the server racks would enter preparations for mass production during the third quarter, with shipments expected to begin in the fourth quarter.

“We expect production volumes to increase gradually over the next several quarters, and it will become our major product next year,” Chiang said, referring to Vera Rubin.

Foxconn’s position as Nvidia’s biggest server manufacturer has given it significant exposure to the rapid expansion of AI infrastructure. But the company said the pace of growth will also depend on the availability of advanced chips and packaging capacity.

Chiang said customer demand remained very strong but cautioned that one of the key factors determining the size of the AI server rack market next year would be the amount of CoWoS capacity that chip companies can secure.

CoWoS, short for Chip on Wafer on Substrate, is an advanced packaging technology developed by Taiwan Semiconductor Manufacturing Co., or TSMC, and is used in the production of AI chips.

Foxconn customers including Nvidia depend heavily on TSMC, the world’s largest contract chipmaker. Capacity for the advanced packaging technology has been constrained as AI demand has surged.

“The market currently expects CoWoS capacity to grow by more than 50% next year, but how much of that can ultimately be translated into shipments of next-generation AI server racks will depend on chip supply,” Chiang said.

Foxconn Plans 30% Increase in Capital Spending

Foxconn expects its capital expenditure to continue rising as it expands manufacturing capacity and invests in businesses linked to AI.

The company forecasts a 30% increase in capital expenditure in 2026 compared with the previous year, according to Reuters.

Its manufacturing expansion is increasingly international.

Most of the iPhones Foxconn produces for Apple are assembled in China, but the company now manufactures the bulk of the iPhones sold in the United States in India.

Foxconn is also building factories in Mexico and Texas to manufacture AI servers for Nvidia, extending its production footprint as demand for AI computing infrastructure grows.

At the same time, the company has been seeking to expand its presence in electric vehicles, another area it has targeted as it diversifies beyond traditional electronics assembly.

AI Growth Reshapes Foxconn’s Business Mix

The second-quarter figures highlight the changing balance of Foxconn’s operations.

The company remains a major manufacturer of consumer electronics and Apple’s leading iPhone assembler, but cloud and networking products have become an increasingly important source of revenue as demand for AI servers accelerates.

With that segment exceeding half of quarterly revenue for the first time, Foxconn’s financial performance is becoming more closely tied to the global buildout of AI computing capacity and the supply chain supporting advanced processors.

That growth also leaves the company exposed to potential constraints further upstream, particularly in advanced chip packaging. Foxconn’s expectations for next-generation server shipments will depend partly on whether suppliers can expand capacity quickly enough to meet customer demand.

Foxconn Shares Rise but Trail Taiwan Market

Foxconn shares closed 2.7% higher on Wednesday ahead of the earnings release.

The stock has gained 17% so far in 2026, according to Reuters, but has significantly underperformed Taiwan’s broader market index, which has risen 57% over the same period.

Despite that gap, Foxconn maintained its expectation for strong full-year revenue growth, supported by AI demand and the traditional peak season for information and communications technology products in the second half of the year.

With Vera Rubin server shipments expected to begin in the fourth quarter and production volumes projected to rise over subsequent quarters, AI infrastructure is set to remain a central driver of Foxconn’s growth, while chip supply and advanced packaging capacity remain key factors determining how quickly that demand can translate into server shipments.

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