Hon Hai reports a 40% increase in sales driven by demand for AI servers.
Hon Hai, also known as Foxconn, has reported a surprising 40% increase in quarterly sales driven by demand for AI servers. In a statement released on Sunday, the Nvidia supplier indicated that shipments of AI racks are expected to continue growing this quarter. For June specifically, revenue reached NT$1.33 trillion (about $45 billion), marking a 21.6% increase from the previous year. The company noted that demand for consumer electronics is entering its typical peak season.
Hon Hai assembles the server racks that contain Nvidia's AI accelerators and has a long-standing relationship in manufacturing iPhones. Chairman Young Liu mentioned that AI server shipments are projected to double by 2026, with the company capturing approximately 40% of the global market for AI rack assembly.
These results provide a clear perspective on the AI infrastructure boom, as Hon Hai receives payment regardless of software performance. Spending plans from major tech companies focused on AI are translating directly into its orders.
Additionally, the company is diversifying its partnerships beyond Nvidia. In June, it collaborated with Intel and SambaNova to develop rack-scale AI infrastructure utilizing Xeon processors.
On the supply chain front, challenges are emerging, with Nvidia securing a long-term supply agreement with SK Hynix for HBM4, causing memory shortages that are affecting consumer devices. The previous quarter was already Foxconn's best ever, and the second quarter has once again exceeded expectations.
The costs associated with this buildout are attracting political scrutiny, including US legislation concerning energy bills for data centers. However, for now, the most reliable profits in the AI economy are with the company responsible for its assembly.
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Hon Hai reports a 40% increase in sales driven by demand for AI servers.
Foxconn's parent company, Hon Hai, exceeded expectations with a 40% increase in quarterly sales, driven by rising demand for Nvidia AI racks, and stated that this momentum is expected to persist.