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Apple supplier Foxconn’s Q2 profit up 12% on cloud demand

A motorcyclist rides at night logo of Foxconn, the trading name of Hon Hai Precision Industry, in Taipei, Taiwan March 30, 2018. REUTERS/Tyrone Siu

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  • Q2 profit T$33.29 bln vs T$29.78 bln year ago; market T$31.02 bln
  • Q2 revenue rose 12% to T$1.5 trln
  • Says smartphones and cloud products drove Q2
  • Sees flat growth for gadgets in Q3
  • Sees strong growth for cloud and networking products in Q3

TAIPEI, Aug 10 (Reuters) – Apple Inc (AAPL.O) supplier Foxconn (2317.TW) gave a cautious outlook for the existing quarter after posting results that exceeded expectations, citing slowing smartphone demand following a pandemic-fuelled boom.

The comments from the Taiwanese company, the world’s largest contract electronics maker, echo those from other Asian tech firms which have warned of a drop in sales of smartphones, TVs and gadgets as surging inflation and deepening concerns of a recession crimp consumer spending.

China’s Lenovo Group (0992.HK) recorded its smallest revenue growth in nine quarters because the world’s biggest PC maker saw sales of the devices ease after being driven by the pandemic, also it was also hit by COVID-19 lockdowns in the home. read more

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Foxconn, most widely known for assembling iPhones, has been largely shielded as far as the popularity of iPhones has endured among its loyal and relatively affluent customer base, also it said on Wednesday that rising inflation could have a limited effect on demand for mid- to high-end smartphones in all of those other year.

But analysts have warned that Apple should brace for softer demand in China, where in fact the economy continues to be reeling from the consequences of strict COVID-19 lockdowns. read more

Foxconn said smart gadgets including smartphones – its main business driver – posted “significant growth” in the next quarter and accounted for 1 / 2 of its overall revenue. Nonetheless it forecast flat revenue growth for that business in the quarter ending in September.

Both net profit and revenue for the April-June quarter rose 12%, and the business’s Chairman Liu Young-way told a post-earnings call that the numbers show its “resilience” amid supply chain problems.

Like other global manufacturers, Foxconn, formally called Hon Hai Precision Industry Co Ltd, has handled a severe shortage of chips that hurt production.

“Our customers, and ourselves, we all have been large global technology companies, and also have relatively strong supply chain management abilities. This advantage we can minimise the impact of any materials shortages,” Liu said.

Foxconn said it anticipates revenues for cloud and networking products to be strong in the 3rd quarter. It reaffirmed its stance from last month that overall revenue this season will grow, rather than previous guidance of remaining flat. read more

It didn’t give a numerical outlook.

Foxconn has expanded into areas including electric vehicles (EVs) and semiconductors recently, announcing handles U.S. startup Fisker Inc (FSR.N) and Indian conglomerate Vedanta Ltd (VDAN.NS).

Additionally it is developing new vehicles with struggling U.S. EV maker Lordstown Motors Corp (RIDE.O).

Foxconn shares closed 0.9% higher prior to the earnings release, pitched against a 0.7% drop in the broader market (.TWII). They will have risen 5.8% up to now this season, giving the business market value of $50.3 billion.

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Reporting by Yimou Lee and Sarah Wu; Writing by Sayantani Ghosh; Editing by Muralikumar Anantharaman

Our Standards: The Thomson Reuters Trust Principles.

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