For the past few weeks, many tech companies have struggled significantly as economic uncertainty has pushed financial markets down.
Even most members of the Magnificent 7, the group of leading tech stocks responsible for much of the sector’s growth, have suffered significant losses recently. A multitude of factors have sent Tesla (TSLA) shares into a consistent nosedive but many of its big tech peers are struggling as well, including Nvidia (NVDA) and Microsoft (MSFT) .
Now, an international electronics producer that works closely with several prominent U.S. tech companies is flashing warning signals that things could be about to get worse for these industry leaders and for their customers.
Foxconn (HNHPF) , known more broadly as the Hon Hai Technology Group, has a key vantage point from its position as a major tech component supplier. And it sees trouble ahead for several tech companies if certain economic trends persist.
U.S. President Donald Trump’s tariffs are sparking concern among tech leaders.
Bad news is coming for Silicon Valley, according to Foxconn
Over the past month, most economic news coverage has been dominated by one theme that is almost impossible to ignore: U.S. President Donald Trump’s tariffs against Canada, Mexico, and China.
Since Trump moved forward with his longstanding campaign promise to levy tariffs against the U.S.’ top trade partners, economic uncertainty has pushed down financial markets. Investors have stood by and watched stocks fall while consumers have watched prices rise, two trends that are likely to persist.
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Like the tech companies it works with, Foxconn has struggled as well recently. The company recently reported Q1 earnings and although its leaders forecast strong revenue growth ahead, CEO Young Liu is concerned about the impact of Trump’s tariffs on the U.S. tech industry at large.
“The issue of tariffs is something that is giving the CEOs of our customers a big headache now,” he stated on the call. “Judging by the attitude and the approach we see the US government taking towards tariffs, it is very, very hard to predict how things will develop over the next year. So we can only concentrate on doing well what we can control.”
In this case, the list of customers who have a “big headache” from the tariffs include Apple (AAPL) , Amazon (AMZN) and Nvidia (NVDA) , tech leaders who do a lot of business with Foxconn. Foxconn is known for assembling Apple iPhones and iPads but it has also partnered with both Amazon and Nvidia, supplying AI-related hardware.
Trump’s tariffs could also raise severe complications for Foxconn, which is currently building a large facility in Mexico to produce Nvidia Blackwell servers. The new export tariff that Trump recently levied against Mexico could force Nvidia to raise the already high price of these devices, upon which many tech companies depend.
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While Liu highlighted on the earnings call that he believes Foxconn’s information and communication products business will remain stable in 2025, he also expressed concern for the broader market. “Under the uncertainties related to geopolitics and tariffs, manufacturing will face challenges and demand might also suffer,” he stated.
The future looks uncertain for Foxconn and its big tech partners
In November 2024, shortly after Trump’s election, Liu issued a statement on the pending trade war, making it clear he didn’t see much cause for concern regarding future tariffs, even as the tech industry braced for severe impact.
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“Clients may decide to shift production locations, but looking at Foxconn’s global footprint, we are ahead,” he mused. “As a result, the impact on us is likely smaller compared to our competitors.”
While that may still be true, it is clear now that the bigger picture for Foxconn has come sharply into focus: if its clients suffer as a result of the Trump tariffs, its business will likely decline as lucrative contracts dry up. A headache for one company usually leads to one of its partners and bad news for Apple is typically bad for its chief manufacturing partners.
The widespread impact of Trump’s tariffs suggests that no companies if their core business model involves buying or selling physical products. Foxconn may be partially shielded but its primary clients and partners likely won’t be so lucky.
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