Despite a weaker-than-expected quarter overall, the world's largest contract manufacturer, which is primarily known for Apple's iPhones and Sony's Playstation, believes it is on course for growth. This is due to the Taiwanese company's new diversification strategy.
Foxconn Technology Group, officially known as Hon Hai Precision Industry, from the island state of Taiwan, is forecasting strong growth for 2025. Last Friday, company CEO Young Liu was extremely optimistic during a conference call on the quarterly results.
Rising sales: Foxconn builds AI servers for Amazon and Nvidia
Although the first quarter of a financial year is traditionally one of the weaker ones, Foxconn will probably manage to achieve a company performance in the first three months of the year that will exceed the average of the past five years. This is primarily due to sales of AI servers for US technology companies such as Amazon and Nvidia, which are expected to double in the first quarter compared to the previous quarter and the same period last year.
Cloud and network technology products, which include AI servers, already accounted for 26% of total revenue in the fourth quarter, making them the company's second-largest source of income directly behind the intelligent consumer electronics division. Liu expects this sector's share of revenue to almost match that of consumer electronics in the current year and could even surpass it in the near future.
Sales of AI servers are expected to exceed the USD 32 billion mark in 2025. According to Liu, this would account for 50 percent of the company's total server sales and secure a market share of more than 40 percent.
AI business strong, but currently still low-margin
These are good prospects for the large-scale manufacturer, although it is currently still paying for them with lower margins. Turnover in the fourth quarter rose by 15 percent compared to the previous year, bringing the total annual turnover to a record 220 billion US dollars. However, net profit fell by 13% in the fourth quarter, falling short of analysts' estimates.
Liu is relatively relaxed about geopolitical risks that could arise from US President Donald Trump's tariff policy. He believes that Foxconn's supply chain is more resilient today than it was during Trump's first term in office.
In the course of manufacturing AI servers, Foxconn has also developed its own AI model called "FoxBrain". This is based on the architecture of Meta's publicly available Llama 3.1 and is said to be the first Taiwanese large language model with advanced reasoning capabilities.
Foxconn wants to manufacture e-cars
In addition to its increased involvement in the AI sector, Foxconn wants to make itself less dependent on orders from consumer electronics manufacturers in another area. The company is planning to manufacture electric vehicles in a similar contract model to the way it produces iPhones for Apple or Playstations for Sony. Foxconn has repeatedly communicated similar plans in recent years and was under discussion as a manufacturer for the now-defunct Apple Car project, among others, but the Taiwanese manufacturer was also linked to VW, Byton and Fiskers.
Foxconn has now expressed interest in a partnership with Japanese car manufacturer Nissan Motors after its merger talks with Japanese competitor Honda Motors fell through.
