Taiwan’s Foxconn, Apple’s biggest iPhone assembler, has warned of a looming AI chips shortage.

But the world’s largest contract electronics maker still expects its business this year to be “slightly better” than 2023, despite its supply chain issues forecast.

“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, referring to a write-down related to its 34% stake in Japanese electronics maker Sharp Corp.

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

Foxconn in November said it had a “relatively conservative and neutral” outlook for 2024.

 

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Demand for artificial intelligence (AI) servers will “of course” be good, but global economic uncertainty given geopolitical problems will affect consumer product demand, he added.

Apple on Thursday forecast a drop in iPhone sales and targeted overall revenue $6 billion below Wall Street expectations as its China business took a hit.

The results confirmed some analysts’ concerns that the company’s signature product is losing ground in the key Asian market where consumers are buying foldable phones and phones from Huawei, powered by a China-made chip.

Liu said production capacity for chips for servers is limited, even with strong demand.

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

Foxconn, formally called Hon Hai Precision Industry Co Ltd, will report fourth quarter earnings next month when it will also update its outlook for this year. It releases January sales data on Monday.

Foxconn’s shares have slid 2.4% so far this year, compared with a 0.7% gain for the broader market.

 

  • Reuters with additional editing by Sean O’Meara

 

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Sean O’Meara

Sean O’Meara is an Editor at Asia Financial. He has been a newspaper man for more than 30 years, working at local, regional and national titles in the UK as a writer, sub-editor, page designer and print editor. A football, cricket and rugby fan, he has a particular interest in sports finance.


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