Nvidia supplier Hon Hai’s sales beat on continued AI demand

Nvidia Corp.’s server assembly partner Hon Hai Precision Industry Co. reported a bigger-than-expected 40% jump in quarterly sales and said AI demand is growing further.

Shipments of AI racks are expected to maintain their momentum in the current quarter, while demand for information and communications technology products is entering peak season, the company said in a statement Sunday. Overall operations are expected to grow both quarter-on-quarter and year-on-year, it said.

Hon Hai, also known as Foxconn, has established itself as a key AI hardware player by assembling servers that house Nvidia accelerators. Alphabet Inc., Amazon.com Inc., Meta Platforms Inc. and Microsoft Corp. are setting aside about $725 billion for AI spending this year, even as warnings abound about overcapacity and questions about how to monetize the technology persist. 

Concerns about a rush to build power-guzzling data centers have also grown since the start of conflict in the Middle East, which has piled pressure on global shipping routes and gas prices.

Hon Hai’s revenue grew to NT$2.51 trillion ($79 billion) in the three months to June, beating the average of analyst estimates of NT$2.37 trillion. Demand for AI-related products drove sales, compensating for a slight decline in demand from consumer electronics and computing products.

The Taiwanese company in March projected strong sales growth in 2026, fueled by sustained AI momentum. It derives a significant chunk of sales from assembling Apple Inc.’s iPhones and MacBooks and is in a position to benefit from any positive reception for the latest iPhone 17 product family.

But like many electronics manufacturers, Hon Hai faces a shortage of memory chips used in a wide range of products from smartphones to PCs and servers. Executives have said the crunch should not significantly impact demand for premium handset and computer products the company makes for major customers.

This story was originally featured on Fortune.com