Apple‘s primary manufacturing partner, Foxconn, recently reported a 9.6% year-over-year decline in revenue for the first quarter of 2024 according to a new report by CNBC. This translates to a figure of 1.32 trillion New Taiwan dollars (roughly $41.2 billion USD).
The decrease also reflects a significant drop of 28.58% compared to Foxconn’s performance in the previous quarter. This news fell short of analyst expectations gathered by LSEG.
Despite the current slump, Foxconn remains confident about its future prospects. The company anticipates revenue growth in the second quarter, even acknowledging this period as a “traditional off-peak season” for smartphone parts manufacturers.
The first quarter is generally a slower period for companies producing smartphone components. Consumer demand for new handsets tends to weaken during this time. Conversely, the fourth quarter witnesses a surge in activity as tech suppliers race to fulfill orders for the holiday season. This explains the significant revenue gap between quarters for Foxconn.
While there’s no data available yet for smartphone shipments in the first quarter of 2024, industry research firm Counterpoint Research reported a 3.2% decline in overall shipments last year, reaching 1.17 billion units.
Foxconn highlighted cloud and networking products as a positive area, experiencing notable growth within this segment. They reported “strong customer pull-in for the cloud segment,” which helped offset challenges related to inventory adjustments in networking products.
Interestingly, Foxconn is increasingly seen as a potential beneficiary of the current excitement surrounding artificial intelligence. This is reflected in a 14% rise in their stock value over the past year. However, it’s important to note that Foxconn lags behind industry leader Nvidia, a prominent AI chipmaker whose stock price has tripled within the same timeframe.
Despite this, Foxconn has gained momentum recently, with its stock price increasing nearly 21% year-to-date. Their involvement in manufacturing enterprise servers for AI applications positions them strategically within the cloud computing infrastructure that powers advanced AI systems.
Foxconn released a positive revenue forecast in a March investor update, anticipating a significant rise fueled by surging demand for AI servers. The company’s next earnings call is scheduled for May 14th, we will also hear from Apple directly, as their next earnings call is slated for May 2nd, offering insights into the tech giant’s performance and future plans.
