Foxconn Beats Q2 Earnings Estimates Despite Cautious Yearly Outlook Amid Economic Uncertainties

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Taipei, August 14 – Foxconn, the world’s largest contract electronics manufacturer and a major Apple supplier has reported better-than-expected earnings for the second quarter of the year, driven by a thriving artificial intelligence sector. However, the company has maintained a cautious outlook for the rest of the year due to global economic uncertainties.

Despite its strong Q2 performance, Foxconn has downgraded its full-year revenue outlook from a previous projection of flat growth to a slight decline. The company’s decision aligns with the challenges faced by various businesses in a weak global economy and the sluggish recovery in China.

Chairman Liu Young-way expressed a “relatively cautious” stance regarding the company’s outlook, citing external variables such as global monetary policy tightening, geopolitical tensions, and inflation. He emphasized that Foxconn remains watchful and adaptive in the face of these uncertainties.

Liu also highlighted the potential in India, where Foxconn has significantly expanded its manufacturing facilities. He noted that the company’s investment in India, which amounts to several billion dollars, is just the beginning of its ventures in the region.

Despite withdrawing from a semiconductor joint venture with Vedanta, Foxconn has stated its intention to participate in India’s chip production plan and apply for related incentives.

Recognizing the growing market for electric vehicle (EV) contract manufacturing, Foxconn indicated that it is highly likely to commence mass production of EV batteries at its Wisconsin facility. While specific details were not provided, the move reflects Foxconn’s strategic push into the EV sector. The company has enlisted the expertise of former Nissan executive Jun Seki to lead its EV business expansion.

Within the artificial intelligence (AI) server supply chain, Foxconn has achieved a substantial market share for GPU modules and substrates. The company is riding the wave of generative AI applications, securing a strong position in server production for this segment. This success offers a promising outlook amid relatively slower demand for smartphones and PCs.

Foxconn reported a 1% drop in second-quarter net profit, beating analysts’ expectations. The company’s net profit for the April-June quarter amounted to T$33 billion ($1.0 billion), surpassing the average forecast of T$25.57 billion.

Despite Apple’s recent prediction of a continued sales slump, which affected Foxconn’s shares, the company’s stock rose 1.4% ahead of its Q2 results. Foxconn remains a pivotal player in the electronics manufacturing sector, assembling approximately 70% of iPhones.

As Foxconn navigates the complex landscape of global economic challenges and shifting market demands, it’s strategic positioning in AI and EV manufacturing could prove instrumental in maintaining its resilience and growth trajectory.