Foxconn reported a second-quarter operating profit beat on strength of its growing artificial intelligence server business.

The contribution from the server business to its revenue is set to grow further in the current quarter, as Foxconn expects a slight decline in smart consumer electronics revenue, as some experts expect slowing iPhone sales after sales surged in the June quarter ahead of the expected imposition of U.S. tariffs.

Foxconn, also known as Hon Hai Technology Group, reported a 27% rise in quarterly profits as demand for AI servers grows. The company expects year-on-year AI server revenue growth of more than 170% in the third quarter.