Hon Hai Precision Industry 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 on Friday (Apr 5) that its March sales were NT$447.5 billion (S$18.8 billion) bringing its first quarter revenue to NT$1.32 trillion, down 9.6 per cent.

Taipei-based Hon Hai is diversifying its business with greater focus on building data centre server racks and other equipment for artificial intelligence clusters. That’s helped the company’s stock reach a record high this year, despite Apple’s flagship device notching double-digit declines 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. The company anticipates sales to be up for the full year. The AI craze has brought big gains in companies like Nvidia as investors see massive growth potential for the sector. Foxconn’s AI server revenue is likely to account for 18 per cent 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 per cent 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 US$180. BLOOMBERG