Foxconn Predicts Revenue Decline Amidst Softened Market Demand

Taiwan's leading manufacturer, Hon Hai Precision Industry Co Ltd, better known as Foxconn and a prominent supplier for Apple Inc (AAPL), has indicated a potential dip in its revenue for the first quarter. This forecast comes on the heels of experiencing weaker market demand in the preceding quarter.

Post-Holiday Season Impact

It is a common pattern for tech manufacturers such as Foxconn, which specializes in electronics, to face a slowdown in the first quarter. This period typically follows the bustling holiday season, a peak time for supplying tech products to companies like Apple, catering to Western holiday shoppers.

Anticipated Year-on-Year Decline

Despite this expected seasonal cycle that has been observed over the past three years, this year's first-quarter revenues are projected to fall short year-on-year, as reported by Reuters.

Specifying exact figures hasn't been Foxconn's approach, but it notes that the first quarter of the previous year achieved a record high. This revenue surge was attributed to the reestablishment of regular factory operations post-COVID, as per Bloomberg's coverage.

December's numbers for Foxconn came in at T$460.1 billion (around $14.84 billion), marking a 26.9% decline from the same month in the previous year. However, these figures surpassed expectations.

The last quarter's revenue also saw a decrease of 5.4% compared to the same period the year before, totaling T$1.851 trillion, which was marginally higher than what analysts projected.

Market Demand and Diversification Moves

Foxconn acknowledged a stable yet uninspired revenue in its smart consumer electronics segment, which encompasses smartphones. This was a consequence of diminishing market demand. Concurrently, Foxconn is investing significantly in India, intending to diversify and manage risks by gradually moving away from its manufacturing concentration in China.

Meanwhile, Apple's shares dipped earlier in the week after analysts downgraded their outlook due mostly to apprehensions surrounding iPhone demand. Despite this, Apple continues to hold its status as the most valuable company worldwide by market capitalization.

With plans to disclose its fourth-quarter earnings on March 14, Foxconn will also provide an updated financial outlook to the public and its investors.

At the time of the last reporting, AAPL shares had fallen slightly by 0.27%, trading at $181.43.

Apple, Foxconn, Revenue