Taiwan's Foxconn Bullish on Outlook But Warns About Supply Chain Tightness

Taiwan's Foxconn, the world's largest contract electronics maker, expressed optimism about its future business performance but cautioned about supply chain tightness. In its earnings release on November 12, Foxconn reported a net profit of T$77.5 billion ($2.35 billion) for the July to September quarter, a 34% increase year-on-year, exceeding expectations.

Chairman Young Liu emphasized the company's confidence in operations next year and anticipated continued growth, citing strong AI demand. Liu predicted high double-digit growth in AI rack shipments for 2027, stating that cloud and networking products already account for over 50% of their revenue, with this share expected to exceed 60% in the next three to five years.

Despite these bullish sentiments, Foxconn cautioned about external variables such as global political and economic uncertainty, inflation, and exchange rate fluctuations that could impact operating costs. Liu also highlighted supply chain challenges, pointing out tightness in the AI and consumer electronics sectors due to chip and memory component shortages.

He remained cautious about the PC segment's outlook, noting that supply bottlenecks should ease as new capacity comes online, but the persistent demand-supply mismatch could continue for some time. Foxconn, formerly known as Hon Hai Precision Industry, reported a 47% year-on-year increase in revenue for Q3, primarily driven by iPhone production in China and India.

The company is expanding its presence in electric vehicles and building factories in Mexico and Texas to produce AI servers for Nvidia. Foxconn's stock rose 4% in the year, lagging behind a 49% gain in the broader Taiwan index, closing 0.8% lower on November 12.