Foxconn Technology Group Update

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Apple supplier Foxconn reported that due to strong demand for smartphones and computing products, net profit in the second quarter increased by 30% year-on-year.

Net income for the three months to June was NT 29.8 billion (US$ 1.1 billion), exceeding the Taiwanese company’s expectations and analysts’ expectations, and setting a record for the same period. Revenue increased by 20% year-on-year to NT$140 million, which also hit a new high.

Most of the world’s largest contract electronics manufacturer’s revenue comes from the assembly of Apple’s iPhone. The company stated that demand for its products will remain strong, and predicts that its revenue in the third quarter will increase by 3% to 15% over the same period in 2020.

But Chairman Young Liu warned that Covid-19 could cause another disruption in the supply chain. “The pandemic seems to be spreading in Asia again. We will do everything we can to control its impact on our operations, but since Asia is the main manufacturing base for electronic components, we must wait and see,” he said.

Foxconn expects consumer electronics manufacturing revenue in the third quarter to decline slightly from the second quarter, but it will still show strong growth year-on-year. The company said that demand for cloud and network products is strong, but due to a high base last year, revenue in this segment may decline slightly. Component shortage.

Apple predicted last month that its revenue growth would slow down and warned that global chip shortages would begin to affect iPhone production.

Foxconn, which has traditionally focused on downstream electronics manufacturing, is building its own semiconductor capabilities. In the past few months, it has invested in DnEx, the parent company of Malaysian chip manufacturer SilTerra, indirectly invested in chip manufacturer KoreSemi in Qingdao, China, and acquired a 6-inch chip manufacturing plant from Taiwanese company Macronix.

Liu said that Foxconn’s semiconductor business is expected to start contributing revenue next year, generating NT$2 billion in 2022 and NT$50 billion each year by 2025.These chips are mainly used to supply the group’s just-started business Manufacturing electric cars (EV).

Except one Previously announced It plans to build an electric car factory in the United States. Liu said the company also plans to build a factory in Thailand to supply the Southeast Asian market and build a factory in Europe. “We are currently negotiating with our European partners,” Liu said.

Foxconn expects that the revenue of its electric vehicle parts business will reach NT$10 billion this year, an increase of 40% over 2020. The business currently mainly includes manufacturing machinery and plastic parts. It expects that sales in this segment will grow even faster next year.