FILE PHOTO: A Foxconn electric two-wheeler powertrain system is displayed at Foxconn?s annual tech day in Taipei, Taiwan October 8, 2024. REUTERS/Ann Wang/File Photo
FILE PHOTO: A Foxconn high energy density solid-state lithium metal battery is displayed at Foxconn?s annual tech day in Taipei, Taiwan October 8, 2024. REUTERS/Ann Wang/File Photo

By Wen-Yee Lee and Faith Hung

TAIPEI (Reuters) -Taiwan's Foxconn, the world's largest contract electronics maker, posted a 27% rise in second-quarter profit, beating market forecasts, on strong demand for artificial intelligence servers.

Net profit for the April-June period for Nvidia's biggest server maker and Apple's top iPhone assembler was T$44.4 billion ($1.48 billion), higher than the consensus estimate of T$38.8 billion compiled by LSEG.

Foxconn, formally called Hon Hai Precision Industry, last month reported record second-quarter revenue on strong demand for AI products but cautioned about geopolitical and exchange rate headwinds.

In its earnings report, Foxconn said it should see significant year-on-year revenue growth in the third quarter, with AI server revenue expected to leap more than 170% year-on-year.

For its full-year revenue, it forecast significant year-on-year growth, in line with previous guidance given in May. It did not elaborate and the company does not provide numerical guidance.

In the second quarter, revenue for its cloud and networking business, which includes AI servers, exceeded that from smart consumer electronics - such as iPhones - for the first time.

Global trade uncertainty could dim the prospects for its outlook this year, as it has a major manufacturing presence in China, though Washington and Beijing this week extended a tariff truce for another 90 days.

Most of the iPhones Foxconn makes for Apple are assembled in China, but the bulk of those sold in the United States are now produced in India. The company is also building factories in Mexico and Texas to make AI servers for Nvidia.

Foxconn has also been looking to expand its footprint in electric vehicles, which the company sees as a major future growth generator, though that has not always gone smoothly.

Earlier this month, Foxconn said it had struck a deal to sell a former car factory at Lordstown, Ohio, for $375 million, including its machinery, that it purchased in 2022 to manufacture EVs.

However, it will continue to occupy the facility and a source familiar with the matter said it could support artificial intelligence data centres.

Foxconn has also expanded beyond its traditional role as an iPhone assembler into other areas too. Last month it formed a strategic partnership with industrial motor maker TECO Electric & Machinery to build data centres.

Foxconn will hold its earnings call at 3 p.m. (0700 GMT) in Taipei on Thursday, where it will also update its outlook for the year.

Foxconn's shares have risen 8.4% so far this year, outperforming the broader Taiwan index's 5.2% gain.

Its shares closed up 0.5% on Thursday ahead of the earnings call.

($1 = 29.9600 Taiwan dollars)

(Reporting by Wen-Yee Lee and Faith Hung; Editing by Ben Blanchard and Christian Schmollinger)