Foxconn to shed light on Chinas tech manufacturing sector as iPhone headwinds mount

Foxconn Technology Group’s public arm Hon Hai Precision Industry Co. will headline an earnings week that should offer insights into the outlook for China’s tech sector, where the slowing economy has dented consumer sentiment. 

Apple Inc.’s iPhone sales in China fell 24% over the first six weeks of the year, according to Counterpoint Research. That confirmed management’s view that the current quarter’s total sales and iPhone revenue would be similar to a year earlier, posing a challenge to Hon Hai, which gets about half its revenue from Apple.

The risk of growing restrictions on China’s access to chip technology has also led Foxconn to shift some of the iPhone assembly to India, as Apple diversifies its supply chain. “The global tech supply chain faces a geographical reshuffle in the next decade due to geopolitical tensions and the need for resilience,” Bloomberg Intelligence said.  

Hon Hai’s unit Foxconn Industrial Internet Co. probably experienced “substantial growth” in artificial intelligence server sales, BI said, though lackluster general server demand and graphics processing unit supply may have been a drag. 

The electric vehicle market in China remained resilient, probably benefiting battery maker Contemporary Amperex Technology Co. Ltd. While it faces risks from a slowing market for EVs globally, the Tesla Inc. supplier maintained a market-leading position through the final quarter of 2023.

Things look brighter in the aviation sector, with Cathay Pacific Airways Ltd. expected to gain from post-pandemic travel demand. Air traffic during China’s Lunar New Year exceeded 2019 levels by about 20%, according to JPMorgan. 

--With assistance from Rachel Yeo and Cindy Wang.