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.
Sources:
https://www.reuters.com/technology/taiwans-foxconn-raises-full-year-outlook-strong-tech-demand-2022-07-05/
https://www.nasdaq.com/articles/taiwans-foxconn-raises-full-year-outlook-on-strong-tech-demand-0
https://www.linkedin.com/company/foxconn