Foxconn’s Q1 Outlook Remains Positive as Q4 Profit Drop 13%
The largest contract electronics manufacturer in the world Foxconn has reported a 13% dip in its fourth quarter profit, Economic Times India has reported. Foxconn’s Q4 profit drop has been attributed to weak performance in the electronics division that offset the performance of its AI server business unit.
The profit drop is the first for the company since quarter two in 2023. At the time, its profit dipped by 0.9% and was attributed to an investment loss and losses from currency exchange. Foxconn, which makes AI servers for Nvidia and assembles iPhones for Apple reported a net profit of $1.41 billion for the October-December quarter, which is much lower than what analysts had projected.
Positive Q1 Outlook
Even with Foxconn’s profit declining, the Taiwanese tech giant expects its Q1 performance to be better than it has been over the last five years. The company also expects to achieve stronger year-on-year growth as customer demand for AI drives revenue growth.
The Taiwanese company’s positive outlook contrasts that of other manufacturers that have been affected by President Donald Trump’s uncertain trade policy. Foxconn holds that booming demand for AI is still on, the company expects it to drive hardware sales.
“We have not seen cloud service providers demand slowing down. There are market rumours that CSP demand will peak this year, and then it will go down next year. But we are not seeing that, at least for Foxconn,” Foxconn Chairman Young Liu said during the earnings call.
Liu added that sales from AI servers could make up over 50% of Foxconn’s server revenue in 2025 as the company increases production for Nvidia.
“For the first quarter, we expect AI server revenue to grow by more than 100%, both quarter-over-quarter and year-over-year,” Liu said.
Global Trade War
Foxconn reported that its Q4 revenues rose by 15.2% following strong AI server sales. While releasing the Foxconn earnings report on March 14, the company said it expects sales from its cloud and networking products to grow. But the escalating global trade war may complicate these prospects considering that the company has a huge production presence in Mexico and China.
The two countries are some of the largest US trading partners that Trump has targeted with high import tariffs. As an Apple contractor, Foxconn assembles most iPhones in China. The company is currently establishing a huge production factory in Mexico where it plans to manufacture Nvidia AI servers.
Navigating Trump Tariffs
Last month, Apple committed to work with Foxconn to set up a 23,200 square metre plant in Houston. According to the US big tech, the plant will be used to assemble AI servers for the data centers it needs to power Apple intelligence. According to Liu, Foxconn will plan manufacturing partnerships with its customers across the US to avoid the rising tariffs.
“Some tariff factors may affect demand. But we have planned in different regions over the past years and have made our supply chain resilience better than it was eight years ago during President Trump’s first term. In response to President Trump’s push for American manufacturing, we will replicate our global production experience and actively establish production bases in the United States. It is difficult to predict the U.S. government’s attitude and approach towards tariffs. We can only wait and see and do our best with what we can control,” he said.
Since the Trump administration took over earlier this year, Foxconn stocks have been affected by US trade policy and import duties. The company’s share prices have dropped by 8.7% this year alone.
