Last week, US President Donald Trump set a 20% levy on Taiwan exports to the US.

Nvidia’s main server assembly partner Hon Hai Precision Industry Co.’s sales growth slowed in July compared to previous few months, signalling that tariff-induced uncertainties are affecting electronics demand. 

Sales rose 7.25% to NT$613.8 billion ($26.42 billion), its slowest growth since January. Analysts were looking for a 12.2% increase in third-quarter revenue. Hon Hai, which also assembles Apple’s iPhones, previously said it expects third-quarter sales to grow sequentially and year-on-year.

Last week, US President Donald Trump set a 20% levy on Taiwan exports to the US. While electronics are exempt, they may be affected by the outcome of a US investigation, under Section 232 of the Trade Expansion Act, which includes probes into sectors such as semiconductor products. 

Still, there may be bright spots for Hon Hai later this year. 

The world’s largest tech companies are raising capital spending further this year to keep ahead in an escalating AI race. Microsoft Corp., Amazon.com Inc., Alphabet Inc. and Meta Platforms Inc. are expected to collectively spend more than US$344 billion ($443.31 billion) this year, with much of the amount devoted to AI data centres.

Nvidia alone has outlined plans to produce as much as half a trillion dollars’ worth of AI infrastructure in the US over the next few years, through manufacturing partners including Foxconn.

Hon Hai seeks to ride that wave. It’s expanding its AI server assembly capacity in the US, selling an EV plant in Ohio under an arrangement in which the Taiwanese company will use the plant to manufacture AI servers, Bloomberg reported.

Hon Hai may also have benefited from strong demand for Apple Inc. devices. The iPhone maker just reported its fastest quarterly revenue growth in more than three years on solid demand in China and said its sales in the current quarter will grow mid-to-high single digits y-o-y.