Foxconn Has Strong Quarter Thanks to AI Hardware Sales -- Update

By Sherry Qin and Yang Jie

Foxconn Technology Group reported robust first-quarter revenue and profit as it ramped up production of server racks, other advanced equipment and consumer devices for the global artificial-intelligence buildout.

Once best known as an iPhone assembler for Apple, the world's largest contract electronics maker now generates a significant share of its revenue making AI servers for companies like Nvidia, becoming a key player in the AI revolution that has seen large tech companies pour billions of dollars in chips, servers and data centers.

Its cloud and networking products--including AI servers--accounted for almost half of total revenue in the three months ended March, while smart consumer electronics, the segment that includes smartphones, contributed about a third to the top line.

The Taiwanese company, formally known as Hon Hai Precision Industry, reported a 19% increase in net profit to 49.92 billion New Taiwan dollars, equivalent to US$1.58 billion on Thursday, roughly in line with market expectations. Revenue rose 29% from a year earlier to NT$2.120 trillion.

Foxconn's new rotating chief executive, Michael Chiang, said on an earnings call that AI server-related demand will continue to support its growth trajectory. Meanwhile, advances in on-device AI are breathing new life into consumer electronics, long seen as a mature market, he said.

Chiang acknowledged pressures of rising memory costs, which are weighing on global consumer-electronics demand, but said that Foxconn clients' higher-end models are likely to feel less of the impact.

As the largest assembler of iPhones, Foxconn has benefited directly from the surge in iPhone 17 upgrades, which helped drive Apple's second-quarter iPhone revenue sharply higher. Now as Apple works toward its first foldable device, Foxconn's manufacturing scale puts it in a strong position to absorb the added demand.

Foxconn's shares were battered in the first quarter as the war in the Middle East and effective closure of the Strait of Hormuz triggered worries about a disruption to Taiwan's energy supply. Its shares have since regained momentum as positive sentiment about robust AI demand outweighed geopolitical concerns.

The company's latest gains have come amid the broader chip-stock melt-up, which saw S&P 500's semiconductor companies adding roughly $3.8 trillion in market capitalization in the past six weeks alone. Chip makers have reported blowout profits as they feed AI companies' insatiable appetite for computing power.

Later this year, Foxconn expects to begin mass production and shipment of co-packaged optical switches, a newer design that puts high-speed optical connections right next to the chip so data can move more quickly and with less power. Taiwan Semiconductor Manufacturing Co., the world's largest contract chip maker, has also been promoting such technology as a key way to handle the soaring data-movement demands of AI and other high-performance computing workloads.

The shift is being accelerated by AI leaders like Nvidia, whose increasingly power-hungry AI systems are pushing suppliers to adopt faster, more efficient interconnect technologies.

Chiang said Thursday that shipments for its major client's next-generation AI server racks are slated to begin in the third quarter. The customer is widely understood in the industry to be Nvidia.

While Foxconn's engineering strength keeps it at the center of the AI boom, the company is also doubling down on regional supply chains to manage the risks of its global footprint. It is expanding AI-server production in the U.S. to be closer to major American customers, such as Nvidia.

The company confirmed this week that certain North American branches experienced a hacking incident. Foxconn said operations remain normal but didn't provide further details about the scope or nature of the breach.

Write to Sherry Qin at [e-mail] and Yang Jie at [e-mail]

(END) Dow Jones Newswires

05-14-26 0611ET