'Slightly Better' Outlook for 2024 for Foxconn, but Shortage of Ai Chips Looms

Foxconn, Taiwan's leading iPhone assembler and the world's foremost contract electronics manufacturer for Apple, anticipates a business performance in the current year that is marginally better than the previous year.

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Despite encountering a chip shortage for AI servers, Foxconn Chairman Liu Young-way expressed satisfaction with the company's performance in the preceding year, even with a substantial write-off in the first quarter related to its 34% stake in Japanese electronics manufacturer Sharp Corp.

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Speaking at the annual employee party in Taipei, Liu shared insights into the outlook for the current year, expressing optimism about a slightly improved performance compared to the preceding year. Foxconn had previously communicated a "relatively conservative and neutral" outlook for 2024 in November.

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While acknowledging the positive demand for artificial intelligence (AI) servers, Liu also highlighted the potential impact of global economic uncertainties stemming from geopolitical issues on consumer product demand. He emphasized that while one market segment, such as AI servers, is expected to perform well, challenges may arise in various other segments due to prevailing uncertainties.

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The chip shortage, a pervasive challenge in the technology industry, has affected various players, including Foxconn, known for its close association with Apple. The shortage has impacted the production of AI servers, an area of growing demand.

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In contrast, Apple, Foxconn's major client, recently disclosed a projection of reduced iPhone sales and an overall revenue target $6 billion below Wall Street expectations. The company attributed these adjustments to challenges in its China business, indicating a decline in iPhone sales in the crucial Asian market. Analysts have raised concerns about Apple's flagship product facing competition from foldable phones and Huawei's offerings, which utilize China-manufactured chips.

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Foxconn's cautious optimism amid the chip shortage and global economic uncertainties reflects the broader challenges faced by technology companies. The delicate balance between strong demand in certain segments, such as AI servers, and potential disruptions in consumer product demand underscores the intricate dynamics within the industry.

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As both Foxconn and Apple navigate these challenges, their performance in the coming months will be closely observed to gauge the resilience of the technology supply chain in the face of ongoing complexities.

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