Fresh Off the Oven — Foxconn on its Quest for World Domination
Remember this movie? Terminator in the 1980s and 1990s.
Arnold Schwarzenegger was pumping lead from his shotgun into the many robots sent from the future.
You see, in the future, Skynet (a sentient AI program) launched nuclear warheads to destroy human civilisations as a counteract against human attempts to shut it down.
While that certainly has not happened in reality, the boom in AI technologies and the industry as a whole has been incredible in the past 3 years.
So, this week, we take a good look at the role of Foxconn in the AI industry, and how it might be ushering the world where AI make almost all the choices for you.
Well, I didn’t make any cause I know this will happen. Let me know how starting your New Year’s resolution has been!
5 Market News You Need to Know
Nippon Steel: If you have been following this steel saga, President Biden has finally blocked the sale of US Steel to Nippon Steel.
- And Nippon Steel is planning to fight back by suing the U.S. government.
- It also plans to appeal to Trump but it seems likely Trump has the same mind as Biden to block it.
Tesla: Tesla didn’t do so hot in 2024, as its annual deliveries of EVs are down.
- Tesla’s share price surged to a 3-year record high in December 2024, boosted by its continued dominance in the US market and Elon’s close ties to Trump.
Alibaba: Alibaba is divesting. It’s selling its stake in Sun Art Retail for US$1.6 billion to DCP Capital.
- As part of its restructuring strategy, it is now focusing on its core businesses, and divesting its non-core ones.
- From 2022 to 2024, Alibaba has seen its revenue flatten to around US$130 to US$140 billion, seeking to boost its financial performance and profits.
Malaysia glove sector: Malaysian Glove companies have been receiving some attention from research houses in the past 2 weeks. Two reasons.
- The U.S. is imposing high tariffs on Chinese gloves, potentially making Malaysian gloves more competitive.
- There is a new contagious flu coming out of China again.
EPF: Well, Malaysia’s EPF might receive more funds to invest from foreigners.
- Ambank has forecasted that local equity markets might be boosted by RM1.7 billion in EPF funds from investors.
- Starting in 2025, it will be mandatory for foreigners to contribute to EPF.
If you didn’t know, those Apple phones you are holding now? They are mainly made by Foxconn.
Foxconn is known as Hon Hai Precision in Taiwan, as it is from Taiwan. But in mainland China, it’s called Foxconn. It makes electronic products, and components and provides services to most of the big boys of tech in the world.
Why are we talking about Foxconn?
It just recorded its highest-ever revenue in 4Q 2024 at TW$2.1 trillion with a growth of 15.2%.
- AI server demand was the main driver.
- But its consumer electrics division (iPhone making mainly) was flat.
And because of this news, other AI-related companies such as Nvidia, TSMC and ASML and also, its suppliers experienced a rise in share price.
There’s good news and then, there’s bad news.
The good ones are
- AI industry is expected to boom further. According to Statista, the global AI market is projected to grow at an annual rate of 27% from 2025 to 2030.
- Foxconn is partnered with Nvidia (the golden child of AI) to build factories, supercomputers, and humanoid robots.
- Almost every electronic devices and products are made by Foxconn. So it can ride the AI boom trend like a medieval Mongolian riding across the endless desert.
However, the bad ones are
- Apple smartphone sales (its biggest client) seem to have stagnated in China, as foreign phones there have plunged due to increased domestic competition.
- Foxconn faces geopolitical risks, being a Taiwanese company, in the ongoing China-Taiwan conflict.
Regardless, it does seem like Foxconn (like TSMC) is well-positioned to supply all the chips and electronic components to AI companies. Without the company, they would have a hard time ramping up data centres and computing power to serve the rocketing demand for AI services.
According to Trading View, market analysts have the company at a target price of TW$285, with an implied upside of 39%.
Interesting Visuals to Look At
I am a sucker for nice visuals. An even bigger sucker (no, don’t think that dirty thought) for crisp visuals.
Here’s one that I saw on Voronoi. What captured my interest were the facts that.
- Walmart is always the biggest revenue generator but is far behind in terms of market capitalisation, it is at 12th position.
- State Grid is China’s utility company and is the world’s largest. It is quite a low-profile company, but man, it’s always at 2nd or 3rd.
- Apple only appeared in 6th position in one of the years (2021), despite being the largest company by market capitalisation.
- There are three Chinese companies (State Grid, CNPC and Sinopec) which have consistently ranked in the top 6.
Wonder about the life of the person in front of you, and perhaps start a conversation; take a child to the park — without your cell phone — and watch what they do when you let them wander; compared the facades of the building around where you work and see if you can figure out when they were built, without succumbing to Google; read a good novel, in a quiet, well-lighted space in a comfortable chair; take up tennis, gardening, or chess, perhaps learn to tune the harpischord. In the modern idiom, be mindful
Peter C.Whybrow, from “The Well-Tuned Brain”
