After reporting revenues that above expectations, Apple iPhone assembler Foxconn issued a cautious prediction for the current quarter, citing decreasing smartphone demand following a pandemic-fueled surge.
The views from the Taiwanese company, the world's largest contract electronics manufacturer, reflect those of other Asian tech giants that have warned of a dip in smartphone, TV, and gadget sales as increasing inflation and deepening recession fears constrain consumer spending.
Foxconn has been largely sheltered from these demand issues thus far due to the popularity of iPhones among a devoted and relatively rich client base, and it stated on Wednesday that rising inflation will have only a limited impact on mid- to high-end smartphone demand for the rest of the year.
Nonetheless, Foxconn anticipated flat revenue growth in its consumer electronics industry, including smartphones, for the third quarter, indicating that demand for some products was declining after "substantial growth" in the second quarter, when the business accounted for half of total revenue.
"On the whole, we are slightly more cautious about the third quarter, but compared to the same period last year, we could still see growth," the company's Chairman Liu Young-way told a post-earnings call.
"We will closely watch developments in geopolitics, inflation, and the pandemic."
Foxconn, formerly known as Hon Hai Precision Industry Co Ltd, has faced a serious shortage of semiconductors, which has hampered manufacturing as bottlenecks from the pandemic persist and the Ukraine war further strains logistical lines. On Wednesday, the corporation stated that assuming there are no major geopolitical events, the second half of the year will look stronger than the first.
China's Lenovo Group, the world's largest PC maker whose results are a solid barometer of consumer electronics demand, reported its smallest revenue rise in nine quarters on Wednesday as gadget sales slowed after being boosted by the pandemic, and it was also hampered by COVID-19 lockdowns at home.
Foxconn's net profit and revenue increased 12% in the April-June quarter, demonstrating the company's "resilience" in the face of supply chain issues, according to Liu.\
"Our customers, and ourselves, we are all large global technology companies, and have relatively strong supply chain management abilities. This advantage allows us to minimise the impact of any materials shortages," Liu said.
Foxconn forecasts good revenue for cloud and networking products in the third quarter. It restated its position from last month that overall revenue will grow this year, rather than remaining flat.
It did not provide a monetary forecast.
With an eye on the future, Foxconn has expanded into fields such as electric vehicles and semiconductors.
Speaking on Foxconn's $800 million investment in troubled Chinese chipmaker Tsinghua Unigroup through a subsidiary last month, Liu said Foxconn will respect the law and has a backup plan if regulators do not accept the venture.
He didn't go into detail about the plan.
Taiwan, which has grown increasingly concerned about China's goal to strengthen its chip industry, wants Foxconn to withdraw its investment, according to the Financial Times on Wednesday.
The democratically administered island, which China claims as its territory, forbids corporations from locating their most advanced foundries in China and has proposed new legislation to prevent China from stealing its chip technology.
Since last week, when US House Speaker Nancy Pelosi visited the island against Beijing's warnings, Taiwan has been subjected to days of Chinese military drills.
Foxconn shares closed 0.9 per cent higher ahead of the earnings announcement, compared to a 0.7 per cent dip in the overall market. They are up 5. per cent this year, giving the corporation a market worth of $50.3 billion.
(Source:www.livemint.com)
The views from the Taiwanese company, the world's largest contract electronics manufacturer, reflect those of other Asian tech giants that have warned of a dip in smartphone, TV, and gadget sales as increasing inflation and deepening recession fears constrain consumer spending.
Foxconn has been largely sheltered from these demand issues thus far due to the popularity of iPhones among a devoted and relatively rich client base, and it stated on Wednesday that rising inflation will have only a limited impact on mid- to high-end smartphone demand for the rest of the year.
Nonetheless, Foxconn anticipated flat revenue growth in its consumer electronics industry, including smartphones, for the third quarter, indicating that demand for some products was declining after "substantial growth" in the second quarter, when the business accounted for half of total revenue.
"On the whole, we are slightly more cautious about the third quarter, but compared to the same period last year, we could still see growth," the company's Chairman Liu Young-way told a post-earnings call.
"We will closely watch developments in geopolitics, inflation, and the pandemic."
Foxconn, formerly known as Hon Hai Precision Industry Co Ltd, has faced a serious shortage of semiconductors, which has hampered manufacturing as bottlenecks from the pandemic persist and the Ukraine war further strains logistical lines. On Wednesday, the corporation stated that assuming there are no major geopolitical events, the second half of the year will look stronger than the first.
China's Lenovo Group, the world's largest PC maker whose results are a solid barometer of consumer electronics demand, reported its smallest revenue rise in nine quarters on Wednesday as gadget sales slowed after being boosted by the pandemic, and it was also hampered by COVID-19 lockdowns at home.
Foxconn's net profit and revenue increased 12% in the April-June quarter, demonstrating the company's "resilience" in the face of supply chain issues, according to Liu.\
"Our customers, and ourselves, we are all large global technology companies, and have relatively strong supply chain management abilities. This advantage allows us to minimise the impact of any materials shortages," Liu said.
Foxconn forecasts good revenue for cloud and networking products in the third quarter. It restated its position from last month that overall revenue will grow this year, rather than remaining flat.
It did not provide a monetary forecast.
With an eye on the future, Foxconn has expanded into fields such as electric vehicles and semiconductors.
Speaking on Foxconn's $800 million investment in troubled Chinese chipmaker Tsinghua Unigroup through a subsidiary last month, Liu said Foxconn will respect the law and has a backup plan if regulators do not accept the venture.
He didn't go into detail about the plan.
Taiwan, which has grown increasingly concerned about China's goal to strengthen its chip industry, wants Foxconn to withdraw its investment, according to the Financial Times on Wednesday.
The democratically administered island, which China claims as its territory, forbids corporations from locating their most advanced foundries in China and has proposed new legislation to prevent China from stealing its chip technology.
Since last week, when US House Speaker Nancy Pelosi visited the island against Beijing's warnings, Taiwan has been subjected to days of Chinese military drills.
Foxconn shares closed 0.9 per cent higher ahead of the earnings announcement, compared to a 0.7 per cent dip in the overall market. They are up 5. per cent this year, giving the corporation a market worth of $50.3 billion.
(Source:www.livemint.com)
