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Foxconn Says It Can Adapt Production to Trump Tariffs

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Foxconn, the world’s largest contract electronics manufacturer and Apple’s primary iPhone maker, announced that it can adjust its production strategy to accommodate potential new U.S. tariffs. This statement was made by Foxconn Chairman Young Liu on Wednesday during a press briefing at the company’s headquarters in New Taipei, Taiwan.

The announcement comes after U.S. President Donald Trump introduced a 25% tariff on all U.S. imports from Mexico and Canada, though the tariff has been paused until March 4. Liu highlighted that Foxconn already operates production facilities in both the United States and Mexico.

“Depending on the tariffs, we will plan different production capacities accordingly,” Liu said. He emphasized that Foxconn is prepared to make necessary adjustments with its U.S.-based partners to meet Trump’s call for more domestic manufacturing.

Liu explained that the company’s flexible global production model minimizes the impact of tariff changes. “For the company, if we don’t manufacture here, we can do it there, so the impact is not too great,” he noted.

However, Liu expressed concern about the broader implications of tariffs, stating that they would not benefit the global economy and could reduce market size.

Foxconn Posts Record Revenue for Q4, Driven by AI Demand

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Taiwan’s Foxconn (2317.TW), the world’s largest contract electronics maker, exceeded expectations by posting its highest-ever revenue for the fourth quarter, fueled by strong demand for artificial intelligence (AI) servers. Revenue surged 15.2% year-on-year, reaching T$2.13 trillion ($64.72 billion), surpassing the anticipated T$2.1 trillion, as reported by LSEG SmartEstimate. Foxconn’s cloud and networking products division saw notable growth due to AI server demand, particularly from clients like AI chipmaker Nvidia (NVDA.O).

While the smart consumer electronics segment, including iPhones, saw flat growth, December alone brought in T$654.8 billion, marking a 42.3% increase compared to the previous year. Looking ahead, Foxconn anticipates a slower performance in Q1 2025, consistent with seasonal trends but still reflecting significant year-on-year growth. The company’s shares rose 76% in 2024, outperforming Taiwan’s broader market growth of 28.5%.

 

Chipmakers Surge on Optimism Fueled by AI Demand

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Shares of chipmakers saw significant gains on Monday, driven by optimism surrounding strong AI-driven demand. Microsoft’s plan to invest $80 billion in AI-enabled data centers in fiscal 2025 sparked expectations that semiconductor demand will remain robust. Micron (MU.O) led the charge with a 10.6% rise in its stock, while other key players like Applied Materials (AMAT.O), Lam Research (LRCX.O), and KLA Corp (KLAC.O) saw increases between 5.1% and 5.5%.

The Philadelphia Semiconductor Index (.SOX) surged 3.9%, reaching its highest point since mid-October, and has risen over 19% in 2024. The broader Nasdaq (.IXIC) also advanced, leading Wall Street’s major indexes higher, while semiconductor stocks in Europe and South Korea saw similar gains.

Citigroup noted that while Microsoft’s spending plan was in line with analysts’ expectations, it was seen as a “modest positive” for the sector, alleviating concerns about a potential drop in capital expenditure.

“AI data centers are very chip hungry, that’s why you have people running towards the chip sector right now,” said Michael Matousek, head trader at U.S. Global Investors.

The strong demand for AI servers, evidenced by Foxconn’s (2317.TW) record revenue for Q4, further fueled the sector’s positive momentum. Nvidia (NVDA.O), a key Foxconn customer, added 5.1%, with CEO Jensen Huang scheduled to deliver a keynote speech at the CES trade show later in the day. AI server manufacturer Super Micro Computer (SMCI.O) saw a 10.3% surge.

Although Nvidia’s quarterly results in November pointed to a slowdown in revenue growth, the surge in demand for the company’s AI chips, which dominate the market, has mitigated those concerns.