Foxconn earnings miss despite record AI demand: what went wrong?

Taiwan’s Foxconn reported a decline in fourth-quarter profit even as demand for artificial intelligence hardware reshapes the global technology supply chain.

The company, formally known as Hon Hai Precision Industry, released earnings on Monday showing profit missed market expectations despite strong global demand for AI products.

Foxconn plays a central role in the electronics industry as Nvidia’s biggest server manufacturer and Apple’s main iPhone assembler.

The results highlight how the company is navigating rising demand for AI infrastructure while expanding production across several countries and exploring new business areas such as electric vehicles.

Profit falls in fourth quarter

Foxconn reported net profit of T$45.21 billion for the October to December quarter, a decline of about 2% from the same period a year earlier.

The result also fell short of expectations. Analysts surveyed by LSEG had forecast quarterly profit of T$63.86 billion.

The company did not provide a reason for the profit decline in its earnings release.

The earnings announcement followed Foxconn’s earlier disclosure in January that fourth-quarter revenue reached a record level, driven largely by strong global demand for artificial intelligence products.

Foxconn is Nvidia’s largest server manufacturing partner and produces hardware used in AI data centres run by major technology companies.

AI boom reshapes production

Rising demand for AI computing systems has pushed Foxconn to expand its manufacturing footprint across several regions.

The company is building new facilities in Mexico and Texas to produce artificial intelligence servers for Nvidia.

These investments aim to bring production closer to customers in North America while strengthening its position in the expanding AI infrastructure market.

Foxconn continues to hold a major position in Apple’s supply chain. Most iPhones assembled are still produced in China.

However, production has been shifting in recent years. Many iPhones sold in the United States are now assembled in India as Apple diversifies manufacturing locations.

The move reflects broader changes in electronics supply chains as companies reduce reliance on a single production hub.

Electric Vehicle plans evolve

Alongside electronics manufacturing, Foxconn has been trying to build a presence in the electric vehicle sector.

The company views EV manufacturing as a long-term growth opportunity, though progress has been uneven.

In August, Foxconn said it had reached an agreement to sell a former car factory in Lordstown, Ohio, for $375 million.

The deal includes machinery at the plant that Foxconn purchased in 2022 when it planned to manufacture electric vehicles there.

The sale signalled adjustments in the company’s EV strategy after earlier attempts to develop vehicles at the site faced obstacles.

Market reaction and investor focus

Foxconn will hold its earnings call later on Monday in Taipei, where it is expected to update investors on business conditions and plans for the year.

The company’s shares have declined about 6% so far this year.

This contrasts with Taiwan’s broader stock market. The benchmark Taiwan index has gained about 15% over the same period.

The results highlight the gap between strong AI demand and the pressures global electronics manufacturers face as they expand production networks and invest in new technologies.