Stockpiled: Inventory Buffers Powering Record Profits for Electronics Manufacturers
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Electronics companies, like Apple, are stockpiling both essential components and finished products to cushion the blow from tariffs. For example, Apple increased its iPhone shipments in the first quarter of 2025 by 10% (almost 58 million iPhones, by the way).
This strategic response is likely to be short-lived as manufacturers and suppliers are adopting a wait-and-see approach to tariffs and the corresponding trade and supply chain disruption. While the future remains uncertain, at least one “ghost manufacturer” behind the iPhone and other products is posting record revenue numbers.
Foxconn (officially known as Hon Hai Precision Industry Co.) is Apple’s largest manufacturing partner. They’re one of the largest private employers in the world, with over 1.3 million employees. They’re Apple’s primary iPhone assembly provider, and they also assemble other Apple devices and accessories.
Foxconn’s primary manufacturing hub is China, including Zhengzhou (aka “iPhone City” and the home of their largest factory), and they also have plants in India, Vietnam, and Mexico, plus some offices in the US and other countries. They manufacture and assemble products for most of the world’s most recognizable electronics brands, including Sony, Microsoft, Nintendo, Google, Amazon, HP, Dell, Lenovo, Cisco, and Nvidia.
With the entire scope and financial impact of tariffs still unforeseen, Foxconn is reaping the rewards of customers accelerating deliveries to build reserves amidst the volatility. Last month, Foxconn’s revenue was $21.4 billion! That’s a 26% increase from April last year. While the company will release earnings later this month, it’s expected the first quarter of 2025 will be Foxconn’s highest-ever cumulative revenue to start a year.
While this proactive approach benefits companies like Foxconn and consumers in the near term, tariffs and the resulting geopolitical conflicts will surely shake things up. Will Q2 bring a cooling-off period for manufacturers like Foxconn, higher consumer prices, and lower company profits? It sure seems that way.
It’s a wild time. Understanding the supply chain helps shed light on what’s to come. Foxconn seems to be positioned well, regardless. They also manufacture a significant portion of Nvidia’s AI servers. Within the next two years, Foxconn expects its server revenue to surpass its iPhone revenue!
