U.S. President-elect Donald Trump has indicated the possibility of imposing a 10% tariff on all imports to the U.S. and a 60% tax on products manufactured in China. This potential policy shift could affect Foxconn, particularly its Zhengzhou facility in China, which is a crucial assembly site for iPhones, as well as its primary client, Apple.
As the largest contract electronics manufacturer globally, Foxconn has been actively diversifying its supply chain, with a notable expansion of production in India. On Thursday, the company confirmed its commitment to increasing investments in the United States, Mexico, and Vietnam.
Following the election of Trump, Foxconn Chairman Young Liu expressed uncertainty regarding future policies, stating that the company would closely monitor any changes from the new U.S. administration. He noted that the facilities in Wisconsin and Texas have experienced consistent sales growth driven by strong demand for AI servers, leading to a positive outlook for its U.S. operations.
Foxconn, which is also a significant supplier to Nvidia, maintained its forecast for 2024, expecting "significant" sales growth as the robust performance of its AI server business helps mitigate a downturn in consumer electronics demand due to geopolitical and macroeconomic challenges.
The company projects that AI servers will represent 50% of its total server revenue in the coming year.
Referencing Nvidia CEO Jensen Huang, Liu remarked that the demand for Nvidia's GB series servers is "very crazy," with shipments expected to increase each quarter next year as production capacity expands.
Liu anticipates that Foxconn will capture "at least 40%" of the global AI server market, with its cloud and networking division, which includes servers, emerging as a key product alongside smartphones.
Foxconn is in the process of constructing the largest manufacturing facility in Mexico dedicated to assembling Nvidia’s GB200 superchips, which are essential for the U.S. company's upcoming Blackwell family computing platform.
Highlighting Foxconn's optimistic outlook, the company achieved record sales for October and, under its official name Hon Hai Precision Industry, anticipates year-on-year revenue growth in the fourth quarter.
However, it did not provide specific numerical guidance.
ADJUSTING EV TARGET
In its efforts to diversify, Foxconn has been venturing into contract manufacturing for electric vehicles but has postponed its goal of capturing a 5% share of the global EV market by 2025 due to a decline in industry demand.
Liu did not specify a revised target but mentioned that the company expects to secure orders from traditional automakers soon and is in the process of finalizing an EV partnership with two Japanese car manufacturers.
For the July to September period, net profit reached T$49.3 billion ($1.5 billion), based on Reuters calculations from the company's nine-month results, with sales increasing by 20% to a record level driven by robust demand for AI servers.
This marks the fifth consecutive quarter of profit growth, surpassing the T$46.3 billion consensus estimate from 14 analysts at LSEG.
In 2024, Foxconn's shares have doubled, outperforming the broader market's 28% increase, supported by a strong outlook on AI.
On Thursday, shares closed down 1.4% ahead of the earnings announcement.