Hon Hai Precision Industry Co. (Foxconn), a major supplier to Apple Inc., has reported weaker-than-expected sales growth, raising concerns about the future of AI infrastructure and its impact on the company’s overall performance. In November, the company posted a 3.5% sales increase, totaling NT$672.59 billion ($20.7 billion), following an 8.6% rise in October. However, the combined growth for these two months falls short of analyst projections, which expected a 13% increase for the quarter.
Foxconn has benefitted from surging demand for AI infrastructure driven by big tech companies like Meta Platforms Inc. and Google’s Alphabet Inc. With the rise of AI applications, particularly since the release of ChatGPT, suppliers like Foxconn have been pivotal in meeting the increased demand for servers and data centers. Despite this, analysts are becoming cautious, as a lack of standout AI applications has led to doubts about the sustainability of the AI boom.
Apple’s expected muted performance in 2025 is another concern, as the tech giant has historically accounted for over 50% of Foxconn’s sales. In recent remarks, Foxconn executives hinted that by 2025, the company’s cloud business, which includes AI servers, could rival phone sales in terms of revenue.
Foxconn has also faced geopolitical challenges. With the looming threat of tariffs from the U.S., particularly under the Trump administration, the company has been diversifying its manufacturing operations. Foxconn has shifted some iPhone production to India, though a large portion of its operations still remain in China. Additionally, the company has invested in a new $33 million facility in Texas to produce AI servers, seeking to mitigate the impact of tariffs on competitors.
As the company navigates these challenges, the future of its sales growth remains uncertain, particularly with the ongoing volatility in both the AI and smartphone markets.
