Foxconn has been largely shielded from these demand problems
so far as the popularity of the iPhone has endured among a loyal and relatively
affluent customer base, and it said on Wednesday that rising inflation will
only have a limited impact on mid- to high-end smartphone demand in the rest of
the year.
Still, Foxconn forecast flat revenue growth in its consumer
electronics business including smartphones for the quarter ending September,
signalling that demand for some devices was slowing after "significant
growth" in the second quarter, when the business accounted for half of its
overall 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."
Like other global manufacturers, Foxconn, formally called
Hon Hai Precision Industry Co, has dealt with a severe shortage of chips that
hurt production as bottlenecks from the pandemic lingered and the Ukraine war
further strained logistical channels.
On Wednesday the company said the second half of the year
would look better than the first if there were no major geopolitical changes.
Resilience
China's Lenovo, the world's biggest PC maker whose results
are a good indicator of consumer electronics demand, posted on Wednesday its
smallest revenue growth in nine quarters as sales of gadgets eased after being
driven by the pandemic, and it was also hit by COVID-19 lockdowns at home.
Both Foxconn's net profit and revenue for the April-June
quarter rose 12 percent, and Liu said the numbers show its
"resilience" amid supply chain problems.
"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 said it anticipates revenues for cloud and
networking products to be strong in the third quarter. It reaffirmed its stance
from last month that overall revenue this year will grow, rather than a
previous guidance of remaining flat.
It did not provide a numerical outlook.
With a view to the future, Foxconn has diversified into
areas including electric vehicles and semiconductors.
Unigroup investment
Speaking about Foxconn's $800 million investment in
embattled Chinese chipmaker Tsinghua Unigroup last month via a subsidiary, Liu
said Foxconn will follow the law and if authorities did not approve the
investment, it had a back-up plan.
He did not elaborate on the plan.
Taiwan, which has become increasingly cautious about China's
ambition to boost its chip industry, wants to persuade Foxconn to unwind the
investment, the Financial Times reported on Wednesday.
The democratically governed island, which China claims as
its territory, prohibits companies from building their most advanced foundries
in China and has proposed new laws to prevent what it says is China stealing
its chip technology.
Taiwan has faced days of Chinese military drills since last
week when U.S. House Speaker Nancy Pelosi visited the island, despite warnings
from Beijing against a trip.
Foxconn shares closed 0.9 percent higher ahead of the
earnings release, versus a 0.7 percent drop in the broader market. They have
risen 5.8 percent so far this year, giving the company a market value of $50.3
billion. © Reuters
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