(Bloomberg) -- Hon Hai Precision Industry Co. missed revenue estimates in the first quarter after being dragged down by sagging iPhone sales, especially in China.
The biggest iPhone contract manufacturer, also known as Foxconn, said that its March sales were NT$447.5 billion ($14 billion), bringing first-quarter revenue to NT$1.32 trillion, down 9.6% and short of an average of analyst estimates of NT$1.39 trillion.
Sales in March rose 11.8% on the prior year after declining by double-digit percentages in the first two months of 2024, and smart consumer electronics sales showed “strong growth,” Taipei-based Hon Hai said in a filing Friday. The company is diversifying its business with greater focus on building data center server racks and other equipment for artificial intelligence clusters. That's helped its stock reach a record high this year, despite sales of Apple Inc.'s flagship device waning in China, the world's largest smartphone market.
For the current quarter, Hon Hai said it expects sales to grow relative to the same period a year earlier — in line with projections for an 8% rise. The company also anticipates sales to be up for the full year. The AI craze has brought big gains in companies like Nvidia Corp. as investors see massive growth potential for the sector. Foxconn's AI server revenue is likely to account for 18% of its total sales in 2025, due to a rising share of Nvidia shipments, JPMorgan analysts including Gokul Hariharan wrote in a note late March.
Still, with Apple's business making up more than half of Hon Hai revenue, challenges remain. iPhone shipments in China fell 33% in February, to only about 2.4 million, according to official data. To stimulate demand, Apple even rolled out rare discounts on its web store in January, and online resellers are now cutting prices by as much as $180.
(Updates with additional details from Hon Hai filing)
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