Foxconn, a major supplier for Apple and Nvidia, has revised its full-year outlook to be more cautious due to uncertainties surrounding U.S. tariffs, despite experiencing strong demand for AI servers. The company acknowledges that while a temporary tariff truce offers some short-term relief, a permanent trade deal is essential for long-term stability.

Chairman Young Liu noted that rapid changes in U.S. tariff policies and recent exchange rate fluctuations have significantly impacted the global supply chain, leading to a more conservative outlook. This adjustment comes after the company initially predicted significant growth for 2025, compared to a previous outlook of strong growth.

Foxconn assembles a significant portion of Apple's iPhones in China and is also constructing a large manufacturing facility in Mexico to produce AI servers for Nvidia. This expansion into Mexico is particularly relevant given that Mexico has been a target of U.S. tariffs. Nvidia announced plans to produce $500 billion worth of AI servers in the U.S. over four years, in collaboration with companies like TSMC and Foxconn in Houston.

In its earnings report, Foxconn anticipates substantial year-on-year growth in the second quarter, driven by high double-digit growth in AI servers and an accelerated ramp-up in volume production. The company's net profit for January-March surged by 91% to T$42.12 billion ($1.39 billion), surpassing analyst estimates. Revenue for the same period increased by 24.2% to a record high, fueled by strong sales of AI servers.

Foxconn is also diversifying into electric vehicles, viewing this sector as a significant future growth opportunity. Its subsidiary, Foxtron Vehicle Technologies, recently signed a memorandum of understanding with Mitsubishi Motors for the supply of an electric vehicle model. Foxconn has also expressed interest in potentially acquiring a stake in Nissan to foster cooperation. Talks with Japanese carmakers are ongoing, but no specific announcements have been made.

Foxconn's shares have experienced a decline of 11.4% year-to-date, influenced by concerns regarding U.S. trade policy. However, the shares rose by 3.2% on Wednesday prior to the earnings call.