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Foxconn to Report Higher Q4 Profit Driven by AI Server Demand

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Foxconn, the world’s largest contract electronics manufacturer, is expected to announce on Friday a 2.35% rise in its fourth-quarter profit, driven by robust demand for artificial intelligence (AI) servers. Net profit for the period from October to December is anticipated to reach T$54.4 billion ($1.65 billion), according to a consensus estimate of 15 analysts, up from T$53.15 billion in the same period last year.

In January, Foxconn reported a 15.2% increase in fourth-quarter revenue, reaching a record level for that quarter, with much of the growth attributed to AI server sales. The company, officially known as Hon Hai Precision Industry, has forecast stronger-than-average performance for the first quarter, predicting substantial year-over-year growth, though it has refrained from offering specific financial guidance.

However, the company’s outlook remains clouded by the ongoing global trade war, which poses challenges for Foxconn as it operates major manufacturing facilities in China and Mexico—two countries that have faced increased import tariffs from the U.S. under President Donald Trump.

In addition, Apple announced last month that it would collaborate with Foxconn to build a 250,000-square-foot facility in Houston, which will assemble servers designed for data centers that power Apple Intelligence.

Despite these gains, Foxconn’s shares have dropped 8.7% this year, largely due to concerns over trade policies and the effects of U.S. tariffs.

The company’s earnings call will take place at 3 p.m. in Taipei (0700 GMT) on Friday, during which it will provide an update on its outlook for the remainder of the year.

Apple Loses Smartphone Sales Crown in China, Drops to Third in 2024

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Apple has lost its position as China’s top smartphone seller in 2024, with local competitors Vivo and Huawei surpassing the tech giant. According to data from research firm Canalys, Apple’s annual smartphone shipments in China declined by 17%, marking its largest drop since 2016.

Vivo, the budget smartphone maker, secured 17% of the market share, while Huawei, with its premium offerings, held 16%, and Apple dropped to third with 15%. This marks a significant shift in market dynamics, as domestic manufacturers gain strength in one of Apple’s largest global markets.

Apple’s decline is attributed to various factors, including the lack of artificial intelligence capabilities in its latest iPhones, which has hurt its competitiveness in China, where services like ChatGPT are unavailable. Canalys analyst Toby Zhu commented that Apple’s premium market position faces multiple challenges, such as Huawei’s resurgence in the flagship segment, the rise of domestic foldable phones in high-price segments, and Android brands like Xiaomi and Vivo building consumer loyalty through technological innovations.

Despite previously experiencing four years of growth following U.S. sanctions on Huawei in 2019, which restricted the company’s access to American technology, Apple now faces a strong challenge from Huawei. The Chinese company has seen a resurgence, with a 24% rise in shipments during the fourth quarter of 2024 after launching new phones with locally-made chipsets.

To combat the decline, Apple resorted to offering discounts. In early January, Apple launched a four-day promotion in China, offering price cuts of up to 500 yuan ($68.50) on iPhone 16 models through official channels. Major Chinese e-commerce platforms followed suit, with Alibaba’s Tmall marketplace offering discounts up to 1,000 yuan ($137) on the latest iPhone 16 series devices.

Among the top five smartphone vendors, Xiaomi posted the strongest growth, with a 29% increase in shipments in the fourth quarter, while Oppo and Vivo saw increases of 18% and 14%, respectively. Overall, smartphone shipments in China rose by 4% year-on-year to 285 million units in 2024.