Foxconn profit jumps 30% as demand for smartphones explodes

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Updates from Foxconn Technology Group

Apple supplier Foxconn reported a 30% year-over-year jump in second-quarter net income due to strong demand for smartphones and computer products.

Net profit rose to NT $ 29.8 billion (US $ 1.1 billion) in the three months to June, surpassing both the Taiwanese company’s expectations and analyst estimates while establishing a record for the period. Revenue increased 20% year-on-year to NT $ 1.4 billion, also hitting a new high.

The world’s largest contract electronics maker, which derives most of its revenue from assembling Apple’s iPhone, said demand for its products will remain strong and forecast third-quarter revenue. would increase by 3 to 15% compared to the same period. in 2020.

But Young Liu, president, warned of the risk of further supply chain disruption due to Covid-19. “The pandemic seems to be spreading again in Asia. We will do everything possible to contain its impact on our operations, but since Asia is a key manufacturing base for electronic components, we have to see, ”he said.

Foxconn predicted that consumer electronics manufacturing revenue would drop slightly in the third quarter from the second, but still show strong year-over-year growth. The company said demand for cloud and network products is strong, but the segment’s revenue is expected to decline slightly due to a high base last year and component shortages.

Apple last month predicted its revenue growth would slow, warning that a global chip shortage would start to affect iPhone production.

Foxconn, which has traditionally focused on downstream electronics manufacturing, is developing its own semiconductor capabilities. In recent months, it has invested in DnEx, the parent company of Malaysian chipmaker SilTerra, has indirectly invested in KoreSemi, a chipmaker based in the Chinese city of Qingdao, and acquired a chip manufacturing plant from six inches to Taiwanese company Macronix.

Liu said Foxconn’s semiconductor business is expected to start contributing revenue from next year, generating NT $ 2 billion in 2022 and NT $ 50 billion per year by 2025. The chips are largely intended to supply the young company of the group, which manufactures electric vehicles (EV).

In addition to a previously announced electric vehicle plant slated for the United States, Liu said the company also plans to build a plant in Thailand to supply the Southeast Asian market, and one in Europe. “Negotiations with our European partners are ongoing now,” Liu said.

Foxconn forecast revenue from its electric vehicle components business, which so far has been mainly manufacturing mechanical and plastic parts, to reach NT $ 10 billion this year, an increase of 40% from 2020. He predicted that sales in the segment would grow even faster next time around. year.

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