Taiwan’s Foxconn, the world’s largest contract electronics manufacturer, posted its highest-ever third-quarter revenue, largely driven by a surge in demand for artificial intelligence (AI) servers. The company, best known as the primary assembler of Apple’s iPhones, exceeded market expectations with a significant 20.2% year-on-year increase in revenue, reaching T$1.85 trillion ($57.3 billion).

In a statement released on Saturday, Foxconn noted, “The result exceeded the company’s original expectations of significant growth.” The company had projected strong growth but surpassed even its optimistic forecasts.

AI Servers Boost Foxconn’s Growth

While Foxconn is renowned for its role in assembling iPhones, it was the strong performance of its cloud and networking products division, particularly AI servers, that led to this unprecedented revenue growth. Foxconn’s key customers, including AI chip manufacturer Nvidia, have seen increasing demand for AI-powered servers, which has driven this uptick in revenue.

Daan Struyven, co-head of global commodities research at Goldman Sachs, pointed out that this shift towards AI server demand highlights the growing importance of AI technologies across industries. “Strong AI server demand led to robust revenue growth for its cloud and networking products division,” Foxconn said, underscoring how vital the sector has become for its operations.

Flat Year-on-Year Growth for Consumer Electronics

Despite the strong quarter-on-quarter performance in its smart consumer electronics division, which includes iPhones, year-on-year growth for this segment remained flat. The launch of new iPhone models ahead of the Western holiday season bolstered Foxconn’s numbers in the short term, but the overall annual performance was stable.

The third quarter typically sees Taiwan’s tech companies racing to meet demand from major global vendors such as Apple, with orders for smartphones, tablets, and other consumer electronics peaking as the year-end holiday shopping season approaches.

In September alone, Foxconn’s total revenue surged to T$733 billion, representing a 10.9% year-on-year increase and the second-highest revenue ever recorded for the month.

Outlook for the Fourth Quarter

Looking ahead, Foxconn expressed cautious optimism. “Entering the peak season in the second half of the year, we anticipate our operation to gradually gain momentum,” the company said, without providing specific numerical forecasts. However, Foxconn did indicate that fourth-quarter results are expected to align with current market projections.

The strong financial performance has been reflected in Foxconn’s stock prices, which have surged by 86% so far this year, significantly outperforming the broader Taiwan market, which has risen by 24%. Shares closed up 3.7% on Friday, in contrast to the benchmark index’s 0.4% decline.

Foxconn is set to release its full third-quarter earnings report on November 14 and will hold its annual Tech Day on October 8-9, where it typically announces new products or partnerships. With the AI market continuing to expand, Foxconn’s strategic focus on AI servers may further solidify its position as a leader in the tech manufacturing sector.

(Adapted from ThePrint.in)