Foxconn sees’ slightly improved’ 2024, warns about AI chip scarcity

Foxconn sees' slightly improved' 2024, warns about AI chip scarcity
Foxconn sees' slightly improved' 2024, warns about AI chip scarcity

Foxconn, Apple’s largest contract electronics manufacturer, anticipates sales to be “slightly better” this year than last but is facing a chip shortage for AI servers.

Taiwan’s Foxconn (2317.TW), Apple’s (AAPL.O), the world’s largest contract electronics manufacturer, expects its business to be “slightly better” this year than last, but is confronting a chip scarcity for AI servers.

“We did pretty well last year, although we had a rather large write-off in the first quarter,” Foxconn Chairman Liu Young-way said on Sunday, alluding to a writedown tied to the company’s 34% share in Japanese electronics maker Sharp Corp. (6753.T).

“As for this year’s outlook, I think it might be slightly better than last year,” Liu stated on the sidelines of the company’s annual staff celebration in Taipei.

In November, Foxconn expressed a “relatively conservative and neutral” view for 2024.

Demand for artificial intelligence (AI) servers will “of course” be strong, but global economic instability due to geopolitical issues will have an impact on consumer goods demand, he said.

“One (market segment) will be good, but very many others—uh-oh.”

Apple forecast a dip in iPhone sales and total revenue of $6 billion lower than Wall Street projections on Thursday as its China unit struggled.

The findings validated some analysts’ concerns that the company’s trademark product is losing ground in the critical Asian region, where consumers are purchasing foldable phones as well as Huawei phones powered by a Chinese chip.

Liu stated that production capacity for server chips is limited, despite high demand.

“When it comes to keeping up with demand, perhaps there need to be new factories,” he said.

Foxconn, formerly known as Hon Hai Precision Industry Co. Ltd., will disclose fourth-quarter earnings next month and update its prognosis for the year. It will announce January sales numbers on Monday.

Foxconn’s shares have fallen 2.4% this year, compared to a 0.7% increase for the overall market.

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