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Foxconn Q2 Profit Up Nearly a Third as ‘Covid Boost’ Continues

Taiwanese tech giant enjoys a growth surge but wary about Covid impact on its supply chain; still, its bosses expect a boost in the third quarter from making iPhone 13 models for Apple


Workers assemble electronic products at a Foxconn factory in China in this file photo by Reuters.

 

Foxconn, the world’s largest contract electronics maker, has reported a 30% rise in profit for the second quarter off the back of strong demand for smartphones and laptops amid the pandemic.

But the company, which assembles iPhones for Apple, is unsure how the worsening Covid-19 crisis will affect its supply chain, said it would have to ‘wait and see’.

Demand for smartphones has been the main driver of record high net profit and revenue for the Taiwanese tech giant in the first half of the year, Chief Financial Officer David Huang said on a conference call to discuss second-quarter results.

For the three months to the end of June, Foxconn’s revenue rose by a fifth to T$1.35 trillion from a year earlier. For the third quarter, it forecast a 3-15% rise in overall revenue and a more than 15% jump in revenue from its consumer electronics business.

Chairman Liu Young-way said the forecasts were based on the pandemic development at the moment.

“The epidemic situation appears to be worsening in Asia,” he said. “Because Asia is the key global hub for ICT components, it needs to be closely watched whether the epidemic will have an impact to the overall supply chain.”

Countries in the Asia-Pacific region, including Australia, Japan, Philippines, Thailand and Malaysia, have seen a recent rise in Covid-19 cases, which has led to stricter curbs.

This has shaken supply chains and fuelled shortages of chips and other items that has hurt many smartphone makers, consumer device firms and car companies.

But Foxconn felt only a small impact from the chip shortage in the April-June quarter thanks to A-list clients who had more clout with their suppliers, Liu said. He reiterated that the shortage could extend into the second quarter of 2022.

IPHONE SALES TO BOOST BUSINESS

Apple said in July that the chip shortage that hurt its ability to sell Macs and iPads would start to affect iPhone production and forecast slowing revenue growth.

Despite the bearish outlook, analysts said Apple’s upcoming iPhone 13 models would still boost Foxconn’s business, with Taipei-based Fubon Securities expecting Foxconn to assemble 75% of the forecast total of 85 million new iPhones this year.

Foxconn, formally called Hon Hai Precision Industry Co Ltd, had been seeking to buy chip plants to stabilise supplies for its new business in electric vehicles (EVs) – a sector in which it plans to become a major player by between 2025 and 2027.

EVs are likely to bring in revenue of more than T$10 billion this year, representing a 40% increase from a year ago, Liu said, with growth expected to be even higher next year.

For the April-June quarter, Foxconn’s net profit rose to T$29.779 billion ($1.07 billion), compared with a Refinitiv consensus estimate of T$25.98 billion drawn from 12 analysts.

Foxconn’s shares have risen about 16% this year. They ended flat on Thursday, in line with the broader market.

 

• Reuters and Jim Pollard

 

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Foxconn pushes deeper into EV market with Fisker tie-up in US

Jim Pollard

Jim Pollard is an Australian journalist based in Thailand since 1999. He worked for News Ltd papers in Sydney, Perth, London and Melbourne before travelling through SE Asia in the late 90s. He was a senior editor at The Nation for 17+ years and has a family in Bangkok.

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