Foxconn Expects Strong Growth in Q1 Despite Profit Decline

Taiwanese electronics giant Foxconn anticipates a significant increase in revenue in the first quarter, driven by strong demand for artificial intelligence (AI) servers. Despite a 13% drop in net profit in the last quarter of 2023, the company remains optimistic about the future.

Foxconn, the main manufacturer of iPhones for Apple, reported a net profit of 46.33 billion Taiwanese dollars, falling short of analysts’ expectations. This decline is mainly attributed to foreign exchange losses and investments in Japan. However, despite this short-term setback, the company achieved a full-year net profit of NT$142.1 billion, marking a 16-year high.

The rise of artificial intelligence is fueling the company’s growth. AI servers are expected to account for more than 50% of server revenue this year, thanks to increased production for Nvidia. To support this surge, Foxconn is building the world’s largest AI server manufacturing facility in Guadalajara, Mexico, where it will produce Nvidia’s latest GB200 Blackwell AI servers. Additionally, the company is expanding its collaboration with Nvidia beyond manufacturing, integrating AI technology into next-generation data centers, autonomous vehicles, and robotics.

Foxconn is focusing on cloud computing and networking to diversify its revenue streams. The company forecasts a 98% increase in profits for the first quarter compared to the previous year, with AI server sales expected to double.

However, trade tensions between the U.S. and China could impact its outlook. With manufacturing operations in China and Mexico, Foxconn is particularly affected by tariffs. The company is also monitoring potential new U.S. tariffs on Chinese-made technology, which could influence its production strategies.

In response to Donald Trump’s policy of relocating production, Apple announced a partnership with Foxconn in December to assemble servers in the United States.

Foxconn claims to have strengthened the resilience of its supply chain, allowing it to better navigate market fluctuations. While the company remains cautious about U.S. government policies, it is prepared to adapt and sustain growth.

Despite an uncertain economic environment, Foxconn is confident in its ability to capitalize on the AI revolution.