Foxconn, the world’s largest contract electronics maker and the primary assembler of Apple’s iPhones, has revised its full-year outlook, citing ongoing uncertainty around U.S. tariffs. Despite benefiting from soaring demand for artificial intelligence (AI) servers, the Taiwanese tech giant is facing challenges linked to shifting trade policies.
Impact of U.S. Tariffs
Chairman Young Liu said during an earnings call that the company’s outlook is now more cautious, reflecting recent changes in U.S. tariff policies and exchange rate fluctuations. “Over the past month, rapid changes in U.S. tariff policies have considerably impacted the global supply chain,” Liu noted, highlighting the need for a more conservative approach to growth forecasts.
Strong AI Demand Provides a Silver Lining
Despite these concerns, Foxconn remains optimistic about its AI server business, which is projected to see strong double-digit growth. The company, which produces AI servers for Nvidia, reported a 91% jump in net profit for the first quarter, significantly beating analyst expectations.
Expanding into Electric Vehicles
Foxconn is also looking to diversify its portfolio, expanding into electric vehicles (EVs). Its subsidiary, Foxtron Vehicle Technologies, recently signed a memorandum of understanding with Mitsubishi Motors to supply an electric vehicle model, signaling a broader push into the EV market.
Global Manufacturing Footprint
With a significant portion of its manufacturing based in China, Foxconn is particularly vulnerable to U.S.-China trade tensions. The company is also expanding its presence in Mexico, another country impacted by U.S. tariffs, to support Nvidia’s ambitious $500 billion AI server production plans in the U.S.
Market Response
Despite these efforts, Foxconn’s stock has fallen over 11% this year, reflecting investor concerns about the impact of U.S. trade policies. However, shares rose 3.2% on Wednesday ahead of the earnings call, indicating some optimism about the company’s long-term growth potential.