Foxconn: Trump's tariffs are a "major headache" for tech giants

The warnings about the international impact of President Donald Trump's erratic tariff policy on the tech sector are getting louder. Foxconn, one of the most important suppliers to US companies such as iPhone maker Apple, cloud service provider Amazon and chip manufacturer Nvidia, also spoke out on Friday. "The issue of tariffs is currently a major headache for the CEOs of our customers," explained the CEO of the Taiwanese supplier, Young Liu, in a conference call with investors during the presentation of turnover and profit figures. Judging by Trump's team's stance on tariffs, it is "very, very difficult to predict how things will develop next year".

Foxconn therefore has no choice but to focus on "doing well what we can control", Liu emphasized in the outlook, according to the Financial Times. More and more of the company's US customers are pushing for Foxconn to relocate more of its production capabilities to the USA in cooperation projects. According to the report, he did not provide any details on this, as negotiations have not yet been concluded. Foxconn estimates that its information and communication products business, which is dominated by Apple, will remain stable in 2025. "But given the uncertainties related to geopolitics and tariffs, manufacturing will face challenges and demand could also suffer," Liu admitted. The company will work closely with its customers to adjust its global footprint.

Foxconn has customs problems with production in China, Mexico & Co.

Foxconn itself is affected by the Trump administration's attempts to relocate more production facilities to the USA. The lion's share of production capacity is located in China. Products manufactured there are to become pricier when exported to the United States due to an additional 10 percent tariff. Larger production locations for the Taiwanese are also India and Vietnam, as Apple is significantly expanding its production there. Both nations are on Trump's list of countries with increased tariff demands. Foxconn is also building the world's largest factory for Nvidia Blackwell servers in Mexico. The US President has set tariffs of 25 percent for imports into the USA for the neighboring countries. Elon Musk's e-car company Tesla recently predicted that Trump's tariff policy would also make production in the US more expensive.

Liu did not share concerns that cloud service providers could cut their spending this year. Rather, the respectable success of Chinese AI company DeepSeek in developing a large-scale language model with lower hardware investment is likely to encourage more medium-sized companies to advance their own relevant skills. This would further increase server demand. Due to this expected growth, cloud and network products would account for half of the company's revenue in 2025, overtaking the consumer electronics business. The latter has long been a burden on Foxconn's balance sheet due to weak margins in smartphone assembly. Surprisingly, the Group reported a decline in profits for the fourth quarter, which it attributed to a decline in less relevant non-operating income.

(nen)