US tariffs informing shift away from reliance on Cupertino
Trade
Image: Apple
Foxconn, the renowned Apple supplier, has reached a significant milestone. For years, smartphone production was the most profitable sector. However, the growing demand for powerful computers, fueled by the global boom in artificial intelligence, has pushed server production ahead of smartphone production as the main source of income.
This shift is clearly reflected in Foxconn’s recent quarterly report, which showed a 27% increase in net profit to about €1.27 billion. Total revenue also exceeded expectations, rising by nearly 16% to €51.3 billion. The cloud and networking division, which includes server production, accounted for 41% of this revenue and surpassed the consumer electronics segment (which includes iPhone production), which made up 35%.
Although Foxconn is optimistic about the future of AI servers and predicts remarkable growth of 170% for the next quarter, the company is tempering its overall outlook. The company cites uncertainty over US trade policy and a strengthening Taiwanese currency as factors contributing to a more cautious forecast, according to CEO Kathy Yang.
Foxconn is closely monitoring the situation regarding US tariffs, given its significant presence in iPhone production in China. To mitigate potential risks, Foxconn has expanded its iPhone assembly operations in India for the US. market. In addition, new production facilities are being set up in Mexico and the United States to manufacture AI servers for chipmaker Nvidia.
In addition to diversifying server production, Foxconn is also actively seeking other growth opportunities. A recent partnership with electric motor specialist Teco is focused on building AI data centres. Foxconn is also exploring the rapidly growing electric vehicle market.
Business AM