Foxconn, also known as Hon Hai Precision Industry, recently announced a 9.6% decrease in revenue for the first quarter of 2024, compared to the same period last year. The company reported a total revenue of 1.32 trillion New Taiwan dollars ($41.2 billion), which also marked a significant 28.58% drop from the fourth quarter of the previous year. These numbers fell below what analysts had predicted in an LSEG poll. Despite these figures, Foxconn is optimistic about revenue growth in the upcoming second quarter, even labeling the current period as a “traditional off-peak season.”
Following the release of these financial results, Foxconn’s shares experienced a 1.4% decline by the market close in Taiwan. It is noteworthy that the first quarter of the year tends to be a quiet period for smartphone parts manufacturers, as consumer interest in new handsets typically decreases during this time. In the fourth quarter, tech suppliers often rush to meet the demand for smartphones, tablets, and other electronic devices from companies like Apple, especially in anticipation of the holiday season. While there is no current data available regarding smartphone shipments for the first quarter of 2024, it is essential to recognize that overall shipments dropped by 3.2% last year to 1.17 billion units, according to Counterpoint Research.
Despite the overall revenue decline, Foxconn highlighted the growth potential in cloud and networking products as a significant positive point in their performance. The company specifically noted increased demand and pull-in from customers for cloud products, offsetting any negative effects from inventory digestion in networking products. With the rise of artificial intelligence (AI) technologies, Foxconn is increasingly being viewed as a beneficiary of this trend. While the company’s stock has seen a 14% increase over the past year, it still falls behind AI chipmaking leader Nvidia, whose shares have more than tripled during the same period. However, Foxconn has experienced positive momentum recently, with its shares up nearly 21% year-to-date.
In a recent investor update in March, Foxconn expressed optimism about revenue growth, especially driven by the high demand for AI servers. The company anticipates a significant increase in revenues due to the booming interest in AI applications. Foxconn is set to conduct its next earnings call on May 14, which will provide more insights into its financial performance and future strategies. Last year, Foxconn partnered with Nvidia to develop “AI factories,” a new generation of data centers equipped with Nvidia chips to power various applications, including autonomous vehicles, robotics platforms, and advanced language models. This collaboration signifies Foxconn’s commitment to expanding its presence in the AI industry and leveraging emerging technologies for future growth opportunities.