Foxconn, the world’s largest contract electronics maker, is expected to report a 72% year-on-year increase in first-quarter net profit, driven by strong demand for AI servers.

Analysts estimate the company’s profit for January to March 2025 at NT$37.8 billion (US$1.25 billion), up from NT$22.01 billion (US$682.31 million) during the same period last year, according to data from LSEG.

Foxconn, officially known as Hon Hai Precision Industry, previously reported a 24.2% rise in first-quarter revenue, marking a record for the quarter.

This growth was attributed to strong sales of AI servers, a key component alongside iPhone assembly for Apple and AI server production for Nvidia.

🔗 Source: Reuters

🧠 Food for thought

1️⃣ Foxconn’s AI pivot demonstrates successful diversification beyond smartphones

Foxconn’s current 72% profit jump showcases a dramatic turnaround from its first yearly profit decline in a decade that occurred in 2017, when net income fell by 6.68% due to weaker-than-expected iPhone sales1.

The company has strategically positioned itself in the AI server market through early partnerships with NVIDIA, joining their HGX Partner Program, which provided privileged access to GPU technologies and reference architectures2.

This transition demonstrates a successful risk mitigation strategy, as Foxconn had previously been heavily dependent on Apple, which drove the company to explore new revenue streams after experiencing its lowest earnings per share in six years back in 20171.

Foxconn’s collaboration on NVIDIA’s HGX-2 platform has placed the manufacturer at the center of the AI computing boom3.

2️⃣ Global trade tensions forcing electronics manufacturers to create geographic redundancy

Apple’s supply chain vulnerability is evident in its heavy reliance on Chinese manufacturing, with approximately 90% of iPhones produced in China, primarily through Foxconn’s facilities4.

US tariffs on Chinese imports have reached extreme levels, creating significant pressure on companies like Foxconn to diversify their manufacturing footprint4.

Foxconn’s expansion into Mexico for producing NVIDIA’s AI servers represents a strategic hedge against geopolitical uncertainties, creating manufacturing redundancy that wasn’t prioritized during decades of cost-based supply chain optimization.

The recent temporary exemptions for key tech products have provided momentary relief, but the underlying trade tensions continue to reshape global electronics manufacturing networks, with analysts predicting ongoing negative impacts on China’s GDP growth5.