TAIPEI - Taiwan's Foxconn, the world's largest contract electronics maker and Apple's biggest iPhone assembler, posted on Friday better-than-expected quarterly revenue on AI server demand, and forecast continued growth in the current quarter.

The third quarter is traditionally the start of the season for Taiwan's tech companies to race to supply smartphones, tablets and other electronics to major vendors such as Apple for Western markets' year-end holiday period.

Foxconn is also powering ahead due to strong demand for servers for artificial intelligence (AI) applications, and its customers include AI darling Nvidia.

This year's third quarter is expected to see revenue grow both year-on-year and compared with the previous quarter, Foxconn said in a statement.

"Entering the peak season of the second half of the year, we anticipate our operation to gradually gain momentum," it said.

The company does not provide numerical forecast.

Foxconn, formally called Hon Hai Precision Industry Co Ltd, said revenue last month reached T$490.7 billion ($15.12 billion), up 16.1% year-on-year and at the second-highest level for the same period.

For the second quarter, revenue soared 19.1% year-on-year to T$1.55 trillion, beating a T$1.51 trillion LSEG SmartEstimate, which gives greater weight to forecasts from analysts who are more consistently accurate, and a record high for the same period.

Second-quarter revenue in its cloud and networking products segment showed strong growth year-on-year and quarter-on-quarter benefiting from strong AI server demand, it said.

However for smart consumer electronics products, including smartphones, revenue was flat year-on-year, Foxconn said, without providing an explanation.

Foxconn's shares have surged 105% so far this year, outperforming a 31% jump for the broader Taiwan market.

In line with the overall market, Foxconn's shares closed flat on Friday ahead of the revenue data release.

The company will report its second-quarter earnings on Aug. 14.

($1 = 32.4430 Taiwan dollars)

(Reporting by Ben Blanchard; Editing by Muralikumar Anantharaman and Sherry Jacob-Phillips)