Taiwan's Hon Hai Precision (OTC:HNHPF) operating as Foxconn Technology Group has reported a significant increase in its first-quarter net profit, despite a decline in revenue attributed to weakened consumer electronics demand.

What Happened: The Taiwan-based contract manufacturer, known for assembling Apple Inc. (NASDAQ:AAPL)’s iPhones, announced on Tuesday that its net profit for the first quarter rose by 72% from the previous year, reaching NT$22.01 billion (US$679 million), reported The Wall Street Journal.

This increase, however, fell short of the NT$28.76 billion estimated by analysts in a FactSet poll. The surge in profit was attributed to a low base last year when Foxconn faced a NT$17.3 billion write-down linked to its 34% stake in Japanese electronics maker Sharp.

Despite the profit surge, first-quarter revenue dropped by 9% to NT$1.324 trillion due to reduced consumer electronics demand.

The pandemic had caused a delay in production and shipment at Foxconn’s Zhengzhou, China factory, leading to a high base of comparison for the first quarter of last year. Nevertheless, its cloud and networking segment experienced strong revenue growth, driven by robust artificial intelligence server demand.

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Foxconn has been diversifying its business lines in recent years, including ventures into electric vehicles and AI. The company is also expanding its production in countries such as India to reduce its reliance on China.

Why It Matters: Foxconn’s performance comes on the heels of a 9% decline in its first-quarter revenue for 2024. Despite this, the company anticipated a revenue increase for the second quarter of 2024, traditionally considered an “off-peak season.”

Earlier in May, Foxconn reported its best-ever April revenue, marking a 19% surge in monthly revenue. This achievement led to a record high for April and a subsequent rise in the company’s shares to an all-time high in Taiwan.

Despite its financial performance, Foxconn has been facing political challenges in its home country. In November, Foxconn’s founder, Terry Gou, withdrew his bid for the Taiwanese presidency, leading to a political shakeup as opposition parties vied for power.

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