Taiwan's Foxconn Raises Full-Year Outlook Thanks to Strong Tech Demand

Taiwan's Foxconn raised its full-year business outlook on Monday due to strong sales of servers and smartphones despite concerns of slowing demand due to rising inflation. The world's largest contract electronics maker had dealt with a severe shortage of chips partly due to the COVID-19 pandemic. It was not the only company to face that challenge; several others also did. The shortage impacted its smartphone production, including its key client Apple. So, the growth outlook is probably a piece of news worthy of cherishing.

In a statement, the company said its June sales rose 31% from the year before and reached a record high for the month. Many factors contributed to this good news. Appropriate supply chain management and growth in the sales of consumer electronics, primarily smartphones, were the key reasons behind the growth.

The high sales numbers of June are also great news when investors are concerned about slowing tech demand amid a downturn in major markets due to the war in Ukraine and high inflation.

In addition to revealing the great numbers, Foxconn also stated that the company was optimistic about its business in the third quarter and mentioned that it could see significant growth compared to a year before.

2022 Outlook

Foxconn also stated that 2022's outlook has improved compared with earlier expectations for no growth. However, the company didn't provide many details regarding the same. The company, formally called Hon Hai Precision Industry Co Ltd, also stated that it saw double-digit yearly growth in sales from servers and telecommunications products in 2022.

Foxconn also highlighted that COVID-19 controls in China just had a limited impact on the company's production as it allowed workers on-site in a closed-loop system.

Analysts' Opinion

In a report, analysts at Daiwa Capital Markets in Taipei said that the demand for servers from U.S.-based cloud service providers helped ensure double-digit growth for the sector. Analysts also mentioned that they expected Foxconn's operating profit to grow 12% to 19% this year.

Analysts at Morgan Stanley stated that Foxconn's upbeat guidance for the third quarter has shown that the strong demand for iPhone assembly and cloud servers will continue to rise.

Stock Market Impact

Foxconn's shares increased about 3% in Tuesday morning trade and even outperformed the broader market, which was only up by 1%. They have dropped about 1% so far in 2022 and have given the firm a market value of US$ 46.52 billion.

About Foxconn

Established in Taiwan in 1974, Hon Hai Technology Group (Foxconn) (2317: Taiwan) is the world's largest electronics manufacturer. Foxconn is also the leading technological solution provider, and it continuously leverages its expertise in software and hardware to integrate its unique manufacturing systems with emerging technologies.

By capitalizing on its expertise in Cloud Computing, Mobile Devices, IoT, Big Data, AI, Smart Networks, and Robotics / Automation, the Group has expanded not only its capabilities into the development of electric vehicles, digital health, and robotics but also three key technologies –AI, semiconductors and new-generation communications technology – which are key to driving its long-term growth strategy and the four core product pillars: Consumer Products, Enterprise Products, Computing Products and Components, and Others. In 2021, Hon Hai's annual revenue reached NT$5.99 trillion.





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