Hon Hai Precision Industry Co., also known as Foxconn, a major Apple and Nvidia contractor, reported single-digit revenue growth for the second consecutive month. This has raised concerns that demand for AI infrastructure hardware might be slowing and will not offset weak iPhone sales. In November, Foxconn’s revenue reached NT$672.59 billion ($20.7 billion), showing a modest 3.5% increase from the previous month. This marks a continuation of underwhelming performance after October and November revenues fell short of analysts’ expectations for 13% growth in the current quarter.
AI Investments and Market Uncertainty
Foxconn, a key partner for Nvidia’s AI servers, benefited from the surge in demand driven by AI tools like ChatGPT, as tech giants like Meta and Google increased investments in servers and data centers. Despite this, doubts are growing among investors about whether such expenses will translate into profits, given that AI applications have yet to deliver significant commercial success. Furthermore, Apple, which accounts for around 50% of Foxconn’s revenue, is expected to post muted annual results.
Hon Hai’s management has indicated that by 2025, revenue from cloud hardware, including AI servers, could match revenue from smartphones. However, this outlook does little to ease concerns about overall growth amid changing market dynamics.
Diversification and Geopolitical Pressures
Adding to Foxconn’s challenges are potential political headwinds. US President-elect Donald Trump has announced plans to impose stricter tariffs on Taiwanese contract manufacturers. This development has reinforced Foxconn’s ongoing diversification efforts, a trend that began during Trump’s earlier presidency. While most production remains in China, the company has moved some operations to India and announced plans to build a $33 million plant in Texas to manufacture AI servers, notes NIX Solutions.
As the tech industry navigates these uncertainties, we’ll keep you updated on Foxconn’s strategies and developments in the AI and hardware markets.