Hon Hai Precision Industry Co., Ltd.

Q2 revenue was TWD1.79 trillion, up 16% YoY, and about 18.6% YoY in U.S. dollar terms. Gross profit margin was 6.33%, down 0.09 percentage points YoY; operating profit margin was 3.16%, up 0.28 points YoY; net profit margin was 2.47%, up 0.21 points YoY. EPS was TWD3.19, up TWD0.66 YoY. Cash and net cash at end-June 2025 were TWD870.5 billion and TWD243.6 billion, respectively. Cash flow from operations was TWD21.9 billion, down from TWD43.8 billion a year ago, and free cash flow was a TWD55.3 billion outflow. For Q3, management expects overall operations to show significant growth vs. both Q2 and last year, but said FX and tariffs could pressure margins. Full-year guidance remained for significant growth, with full-year operating margin targeted to stay roughly flat vs. last year. AI server-related revenue is expected to exceed TWD1 trillion for the full year, and Q3 AI server revenue is expected to rise over 170% YoY.

Kathy Yang framed the quarter as broad-based strength, with record revenue, operating profit, and net profit, and said AI is the core driver of the company’s next stage of growth. She emphasized that Hon Hai is moving from layout to execution across AI servers, EVs, healthcare, semiconductors, and smart manufacturing, and repeatedly pointed to the company’s global manufacturing footprint as a competitive advantage. Her tone was confident but measured, with frequent caution on tariffs, exchange rates, and geopolitical uncertainty.

Chiu-Lien Huang focused on the financial bridge: Q2 gross margin slipped to 6.33% mainly because of exchange-rate fluctuations, while operating margin improved to 3.16% because revenue rose 16% while expenses increased only 4%. She highlighted cash and liquidity at TWD870.5 billion in cash and TWD243.6 billion in net cash, but noted working-capital needs, higher capex, and FX reduced net cash by TWD164.9 billion YoY. She said Q2 operating cash flow was TWD21.9 billion and free cash flow was a TWD55.3 billion outflow, with capex at TWD77.2 billion, up TWD14.1 billion YoY; full-year capex growth remains above 20%, while next year’s capex plan is not yet available.

Analysts pressed on AI server bottlenecks, the transition from older to next-generation racks, U.S. investment plans, capex, and the effect of FX on Q3 and the full year. Management said Q2 was a turning point for rack systems, with major yield and production breakthroughs, and projected Q3 shipments to rise as much as 300% QoQ, with no meaningful “transition period” expected between product generations. On U.S. investments, they said the company already has operations in 12 states and will keep expanding in Texas, Wisconsin, Ohio, and California to support AI servers and cloud/networking. On FX, management reiterated that every TWD1 appreciation trims revenue by about 3% and gross margin by about 0.1 point, but still expects full-year operating margin to stay roughly flat.