Foxconn, the world’s largest contract electronics maker and a key supplier to Apple, has reported better-than-expected second-quarter earnings, driven by a strong performance in the artificial intelligence (AI) sector. However, the company remains cautious about the rest of the year due to global economic uncertainties. Foxconn has revised its full-year revenue outlook to a slight decline from its previous guidance of flat growth, reflecting the challenges faced by many companies in a weak global economy and slow recovery in China. The company assembles approximately 70% of iPhones sold worldwide. Chairman Liu Young-way cited external variables such as tightening global monetary policy, geopolitical tensions, inflation, and other uncertainties as reasons for the cautious outlook.
During an earnings briefing, Mr. Liu expressed optimism about the potential in India, where Foxconn has rapidly expanded its manufacturing facilities. He stated that the company’s several billion dollars in investment in India is just the beginning. Although Foxconn recently pulled out of a joint venture with Vedanta to make semiconductors in India, it intends to apply for incentives under the country’s chip production plan. Mr. Liu also mentioned the growing electric vehicle (EV) contract manufacturing market and said that it is very likely that Foxconn will mass-produce EV batteries at its troubled site in Wisconsin, although he did not provide further details.
Foxconn has been actively diversifying its business and has made EVs a major part of its plans. The company recently hired Jun Seki, a former Nissan executive, to lead its electric business expansion. Additionally, Foxconn is gaining momentum in the servers segment for generative AI applications and believes that it can deepen collaboration with North American customers in this area. Mr. Liu acknowledged that while AI growth has been strong, demand for other products such as smartphones and PCs has been slower.
Despite a 1% drop in second-quarter net profit, Foxconn’s results exceeded analyst expectations. The company expects revenue for its smart consumer electronics products, including smartphones, to slightly decline year on year in the third quarter. This segment accounts for about half of Foxconn’s total revenue. Bloomberg News has reported that Apple has asked suppliers to produce approximately 85 million units of the iPhone 15 this year, similar to the previous year’s production. This should help maintain steady shipments despite the challenges posed by the global economy and a projected decline in the overall smartphone market. Apple is also considering raising the price for its Pro models, which could further increase revenue. Foxconn anticipates a slight decline in overall revenue for the third quarter.
Apple, on the other hand, has recently forecasted a sales slump for the current quarter. Despite beating Wall Street sales and profit targets in its fiscal third quarter, the company’s outlook has caused concern among investors. Both Reuters and Bloomberg have reported on Foxconn’s earnings results and outlook.