Thanks to a booming artificial intelligence market, Apple supplier Foxconn exceeded expectations for second-quarter earnings on Monday, but it maintained a cautious outlook for this year due to unpredictability in the global economy.
The world’s largest contract electronics manufacturer reduced its full-year revenue forecast to a slight decrease from a previous flat forecast, joining other companies grappling with a weak global economy and a sluggish recovery in China.
“At the moment, there are many external variables: global monetary policy tightening, geopolitical tensions, inflation, and other uncertainties,” said Foxconn Chairman Liu Young-way, who described the company’s outlook as “relatively cautious.”
Liu said during an earnings call that he sees a lot of potential in India, where Foxconn has rapidly expanded its manufacturing facilities, and that “multiple billion dollars in investment is only the beginning.”
Foxconn announced last month that it would withdraw from a joint venture with Vedanta to manufacture semiconductors in India, but that it would apply for incentives under the country’s chip production plan.
Foxconn, which sees a growing EV contract manufacturing market, has stated that it is very likely to mass produce electric vehicle batteries at its troubled Wisconsin plant.
Liu did not go into specifics.
Foxconn has made electric vehicles, or EVs, a key component of its diversification strategy, and has hired a former Nissan executive, Jun Seki, to oversee the company’s EV expansion.
According to Liu, Foxconn has a “very high” market share for GPU modules and substrates in the AI server supply chain.
As demand for generative AI applications grows, Foxconn is gaining traction in the server market and believes it can deepen collaboration with North American customers, according to Liu, providing a bright spot amid slower demand for smartphones and PCs.
“AI growth has been strong, but we have not seen any increase in other products.” Foxconn had previously reported a 1% drop in second-quarter net profit, which exceeded analyst expectations.
The Taiwanese company reported a T$33 billion ($1.0 billion) net profit for the April-June quarter, down from a revised T$33.29 billion in the same period the previous year.
According to Refinitiv, the profit was higher than the average forecast of T$25.57 billion from 13 analysts.
Foxconn predicted that revenue from its smart consumer electronics products would fall slightly year on year in the third quarter. This category includes smartphones and accounts for roughly half of Foxconn’s total revenue.
Overall revenue for the third quarter would also be down slightly, according to the company.
Apple forecast this month that its sales slump would continue into the fourth quarter, sending shares lower despite exceeding Wall Street sales and profit targets in the fiscal third quarter.
Shares of Foxconn, which manufactures roughly 70% of iPhones, rose 1.4% ahead of the results, compared to a 1.3% drop in the broader market. Its stock is up 10% so far this year.