Q1 Net Profit Rises 91% Year on Year; Expansion Plans for EV Footprint Continue
HYDERABAD, May 14th 2025— Taiwan’s Foxconn (2317.TW), the world’s largest contract electronics maker, reported a staggering 91% surge in quarterly net profit for the first quarter of 2025, driven by strong demand for AI servers. The earnings, which surpassed market expectations, were tempered by concerns over U.S. tariffs that loom over its China-based manufacturing operations.
Foxconn, formally known as Hon Hai Precision Industry, recorded a net profit of T$42.12 billion ($1.39 billion) for the January-March period, significantly outpacing the T$37.8 billion average predicted by 13 analysts in estimates compiled by LSEG. The company attributed the robust growth to a 24.2% year-on-year increase in revenue, primarily fueled by surging sales of AI servers that cater to tech giants such as Nvidia (NVDA.O).
The electronics giant remains a critical supplier for Apple (AAPL.O), assembling the majority of iPhones in China, while also playing a key role in manufacturing AI servers for Nvidia. Despite the promising figures, Foxconn’s Chairman Young Liu expressed caution during an earnings call, pointing to U.S. tariffs as a potential headwind that could disrupt its manufacturing operations in China. “The tariffs present a challenge for us, and the outlook for the full year remains conservative,” Liu noted.
Tariff Tensions Cloud Outlook
Foxconn’s dependency on its vast manufacturing footprint in China leaves it vulnerable to U.S.-China trade tensions. While both nations recently agreed to reduce tariffs for a temporary 90-day period, Liu warned that long-term trade policies remain uncertain. “We welcome the truce, but the real solution lies in a permanent trade agreement,” he added.
The trade spat has already cast shadows over Foxconn’s share performance, with its stocks dropping 11.4% this year, notably more than the 5.4% decline seen in the broader Taiwan index (.TWII). Despite a 3.2% uptick ahead of the earnings call, market analysts suggest that tariff volatility could continue to weigh on investor confidence.
In response to geopolitical tensions, Foxconn is broadening its manufacturing reach outside of China. A major facility is under construction in Mexico to produce AI servers for Nvidia, aimed at reducing its dependency on China and insulating itself from tariff disruptions. This strategic shift is seen as part of Foxconn’s broader risk mitigation strategy.
Accelerating AI Server Growth Amidst Global Demand
Foxconn’s strong Q1 performance was primarily driven by soaring demand for AI servers, an area where it has cemented itself as a critical supplier. During its earnings call, the company projected significant year-on-year growth in AI server production for the upcoming quarter, with expectations for high double-digit expansion.
As generative AI and machine learning applications continue to grow, demand for high-performance computing servers is scaling rapidly. Foxconn’s capacity to meet this surge positions it strategically in a competitive global market. Analysts predict that the company’s collaboration with Nvidia, one of the leaders in AI technology, will further solidify its standing in this sector.
Expanding Electric Vehicle (EV) Ambitions
Aside from its core electronics business, Foxconn is making calculated moves into the electric vehicle (EV) space. The company’s subsidiary, Foxtron Vehicle Technologies (2258.TW), recently signed a memorandum of understanding with Mitsubishi Motors (7211.T) for the supply of an electric vehicle model. This partnership marks another step towards Foxconn’s ambitions of becoming a major player in EV manufacturing.
The company has also expressed interest in a potential stake in Nissan (7201.T), aiming for collaboration in EV production. As global demand for sustainable transport solutions rises, Foxconn’s diversification into the EV market is viewed as a strategic pivot to capture emerging growth opportunities.
Looking Ahead: Opportunities and Risks
While Foxconn’s growth in AI servers and its expansion into electric vehicles highlight its adaptability, tariff uncertainties continue to cloud its near-term outlook. Chairman Liu’s cautious tone during the earnings call reflects the company’s strategic balancing act amid geopolitical tensions.
As Foxconn holds its earnings call at 3 p.m. (0700 GMT) in Taipei, stakeholders and analysts will be keenly watching for updates on its plans to navigate the challenges of U.S.-China trade dynamics and its evolving manufacturing strategy. Whether its aggressive expansion plans can offset tariff-related pressures remains to be seen.
For now, Foxconn’s revenue growth and diversification signal resilience, but long-term stability may hinge on geopolitical resolutions and strategic manufacturing shifts outside of China.
