Foxconn Revises 2025 Outlook: AI Server Demand Soars Amid Currency and Trade Uncertainty
Image Credit: Maxim Hopman | Splash
Foxconn, the world’s largest contract electronics manufacturer and a key supplier for Apple and Nvidia, has revised its full-year earnings outlook for 2025, citing the appreciation of the Taiwan dollar and uncertainties in U.S. trade policies. Despite robust demand for artificial intelligence servers, the company adopted a cautious stance due to currency exchange rate fluctuations. This development underscores the critical role of AI in driving Foxconn’s growth while highlighting vulnerabilities in global supply chains.
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Currency Appreciation Impacts Revenue Projections
Foxconn announced on May 14, 2025, during its first-quarter earnings call, that the Taiwan dollar’s recent appreciation against the U.S. dollar has prompted a downgrade in its 2025 revenue outlook from “strong growth” to “significant growth”. Chairman Young Liu explained that the stronger Taiwan dollar reduces the value of international revenues, primarily earned in U.S. dollars, when converted back to Taiwan’s currency. According to Foxconn’s Chief Financial Officer David Huang, every NT$1 rise in the Taiwan dollar against the U.S. dollar on a yearly average reduces the company’s revenue by approximately 3%.
The Taiwan dollar appreciated by approximately 8% against the U.S. dollar from February 14 to May 14, 2025, with some sources citing a figure of 8.42%, driven by factors including easing U.S.-China trade tensions and speculation about U.S.-Taiwan trade negotiations. A notable surge occurred on May 4–5, when the Taiwan dollar jumped 9% in two days, reaching a peak of 0.03427 USD. Taiwan’s central bank intervened to stabilize the currency, resulting in a slight correction to approximately 0.0328 USD by May 14. This currency volatility has directly impacted Foxconn’s financial projections, as a significant portion of its earnings comes from global markets.
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AI Server Demand Remains a Bright Spot
Despite the cautious outlook, Foxconn reported strong performance in its AI server segment, which is expected to be a primary growth driver in 2025. The company, a key manufacturer of AI servers for Nvidia, anticipates high double-digit growth year-on-year in this sector for the second quarter. Liu noted that AI servers are projected to account for over 50% of Foxconn’s total server revenue in 2025, fueled by sustained demand from cloud service providers and other tech giants.
Foxconn’s first-quarter 2025 results reflect this strength, with net profit soaring 91% year-on-year to NT$42.12 billion (approximately US$1.39 billion), surpassing analyst expectations of NT$37.8 billion. Revenue for the January–March period rose 24.2% to a record NT$1.324 trillion, driven by robust AI server sales. The company is also expanding its AI server production capacity, including a new facility in Mexico to assemble Nvidia’s GB200 “superchips” and investments in the U.S., such as a US$128 million purchase of land and facilities in California.
This focus on AI infrastructure aligns with industry trends, as global demand for AI computing power continues to grow. Liu emphasized that 2025 will be the “year of AI” for Foxconn, with plans to not only supply AI hardware but also leverage generative AI within its operations, including its smart manufacturing, electric vehicle (EV), and smart city platforms.
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U.S. Trade Policy Adds Uncertainty
Foxconn’s revised outlook also reflects concerns over U.S. trade and tariff policies, which have introduced significant uncertainty into global supply chains. The company operates extensive manufacturing facilities in China and Mexico, both of which are targets of proposed U.S. tariffs under President Donald Trump’s administration. A temporary 90-day tariff reduction agreement between Washington and Beijing, announced around early May 2025, offers short-term relief, but the lack of a permanent trade deal continues to weigh on Foxconn’s planning.
Liu highlighted that rapid changes in U.S. tariff policies over the past month have disrupted supply chains, particularly for Foxconn’s operations in China, where most Apple iPhones are assembled, and in Mexico, where it is building a major AI server plant. In February 2025, Liu stated that Foxconn’s global manufacturing footprint, spanning the U.S., Mexico, India, and Vietnam, allows it to adapt production locations to mitigate tariff impacts. However, he acknowledged that tariffs could shrink markets and challenge the global economy.
The company’s strategic diversification, including investments in regional manufacturing hubs, aims to reduce reliance on any single market. For instance, Foxconn is expanding in the U.S. to serve Nvidia’s US$500 billion AI server production plan over four years, collaborating with TSMC in Houston.
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Financial Performance and Market Reaction
Foxconn’s stock has faced pressure, declining 11.4% year-to-date in 2025, compared to a 5.4% drop in the broader Taiwan index. On May 14, shares closed up 3.2% ahead of the earnings call but fell 2.2% the following day, reflecting investor concerns over the revised outlook. The company’s strong first-quarter performance, however, demonstrates resilience, with AI server growth and operational efficiency cushioning external pressures.
Foxconn remains optimistic about its second-quarter performance, expecting significant growth both quarter-on-quarter and year-on-year, particularly in cloud and networking products. The company does not provide specific numerical guidance but emphasized that its global presence and AI-driven strategy position it to navigate current challenges.
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Broader Implications for the Tech Industry
Foxconn’s cautious outlook highlights the interplay between currency fluctuations, trade policies, and the booming AI sector. As a critical player in the global tech supply chain, its performance serves as a bellwether for the electronics industry. The appreciation of the Taiwan dollar and potential U.S. tariffs could increase costs for Foxconn’s clients, such as Apple and Nvidia, potentially affecting product pricing or margins.
Moreover, Foxconn’s heavy investment in AI servers underscores the transformative impact of AI on manufacturing. The company’s ability to scale production in response to demand from cloud service providers and tech giants will be crucial for sustaining growth. Its diversification into electric vehicles, with initiatives like Foxtron’s partnership with Mitsubishi, further illustrates its strategy to hedge against risks in traditional electronics manufacturing.
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Source: Yahoo! News, Reuters, Toms Hardware
