Foxconn Forecasts Robust AI Demand as Q2 Profit Tops Expectations, Capital Spending Rises Over 20%

Foxconn expects a significant rise in third-quarter revenue, driven by a 170% YoY increase in AI server revenue. The company's cloud and networking products accounted for 41% of its revenue in Q2, while smart consumer products represented 35%. Foxconn plans to boost server production capacity in Texas and Wisconsin, but warns of uncertainty due to US tariffs and trade tensions with China.

Foxconn, the world's largest iPhone manufacturer, has reported robust growth in its AI server business, with revenue expected to leap by more than 170% year-on-year in the third quarter. This significant increase is primarily driven by the growing demand for AI servers, a trend that has been fueled by the expanding cloud computing infrastructure of major tech firms such as Amazon, Microsoft, and Alphabet's Google.

According to Reuters, Foxconn's second-quarter net profit rose by 27% year-on-year, with the AI server business contributing more to revenue than smart electronics for the first time. The company's cloud and networking products, which include servers, accounted for 41% of its revenue in the second quarter, while smart consumer products represented 35% [1].

Foxconn's rotating CEO, Kathy Yang, emphasized that AI has been the primary growth driver for the company so far this year. However, she also cautioned that the company is keeping a close eye on potential challenges from U.S. tariffs and currency exchange rate fluctuations [1].

To capitalize on the growing AI server market, Foxconn plans to increase its server production capacity in Texas and Wisconsin, with capital spending expected to rise by more than 20% this year. The company is also looking to expand its footprint in electric vehicles, which it sees as a major future growth generator, although initial production of its Model C EV will take place in Taiwan [1].

Foxconn has faced geopolitical challenges, including the trade spat between the U.S. and China, which could impact its outlook. However, the company has been proactive in diversifying its manufacturing base, with a significant presence in Mexico and Texas to make AI servers for Nvidia [1].

In a separate development, Foxconn has sold its Lordstown, Ohio plant for $375 million to its partner SoftBank. The plant will be used to manufacture cloud-related products, while the goal of manufacturing its Model C EV for the U.S. market remains unchanged [1].

Foxconn's shares have risen by 8.4% this year, outperforming the broader Taiwan index's gain of 5.2%. The company's strong performance in the AI server segment is likely to continue driving its growth, despite the uncertainties surrounding global trade tensions.

References:
[1] https://www.marketscreener.com/news/foxconn-ai-server-revenue-in-q3-expected-to-grow-more-than-170-y-y-ce7c51d8de81f325
[2] https://www.reuters.com/world/china/foxconn-sees-robust-ai-demand-second-quarter-profit-tops-forecast-2025-08-14/