Tech

Apple supplier Foxconn begins to feel the pain of slowing smartphone sales


Apple’s iPhone assembler, Foxconn, gave a cautious outlook for the current quarter after posting results that beat expectations, citing slowing smartphone demand following a pandemic outbreak. .

Comments from the Taiwanese company, the world’s largest contract electronics maker, echoing comments from other Asian tech companies that have warned of a slump in smartphone sales, TVs and appliances as rising inflation and growing recession fears dampen consumer spending.

Foxconn has been largely protected from these demand problems so far because of the popularity of Iphone already exists in a loyal and relatively affluent customer base, and on Wednesday said rising inflation will have only a limited impact on mid- to high-end smartphone demand for the rest of the year. back of the year.

However, Foxconn forecast flat revenue growth in its consumer electronics business including smartphones for the quarter ended September, signaling that demand for some devices is slowing. after “significant growth” in the second quarter, when the business accounted for half of total revenue.

“Overall, we’re a bit more cautious about the third quarter, but year-on-year we can still see growth,” the company’s Chairman Liu Young-way said after the earnings call. import.

“We will be closely monitoring developments in geopolitics, inflation and the pandemic.”

Like other global manufacturers, Foxconnofficially known as Hon Hai Precision Industry Co Ltd, has been dealing with severe chip shortages that have affected production due to bottlenecks caused by the prolonged pandemic and the Ukraine war which further strained logistics channels.

On Wednesday, the company said the second half of the year would be better than the first without major geopolitical changes.

POSSIBILITIES

China’s Lenovo Group, the world’s largest PC maker whose results are a good indicator of consumer electronics demand, posted its smallest revenue growth in nine quarters on Wednesday as sales Equipment sales decreased after being affected by the pandemic and it was also affected by COVID-19 lockdown at home.

Both Foxconn’s net profit and revenue for the April-June quarter rose 12%, 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 capabilities. This advantage allows us to minimize the impact. of any material shortage,” Liu said.

Foxconn said it expects revenue for network and cloud products to grow strongly in the third quarter. It reaffirmed its stance from last month that this year’s overall revenue should grow, rather than its previous guidance of staying the same.

It does not provide a digital outlook.

With a vision for the future, Foxconn has diversified into areas including electric vehicles and semiconductors.

UNIGROUP INVESTMENT

Speaking about Foxconn’s $800 million investment in Chinese chipmaker Tsinghua Unigroup last month through a subsidiary, Liu said Foxconn will follow the law and if authorities don’t approve the investment. , they will have a backup plan.

He did not elaborate on the plan.

Taiwan, which is increasingly cautious about China’s ambitions to boost its chip industry, wants to convince Foxconn to loosen up its investment, the Financial Times reported on Wednesday.

The democratically administered island, which China claims as its territory, forbids companies from building its most advanced foundries in China and has proposed new laws to block what they say. is China stealing their chip technology.

Taiwan has faced days of Chinese military exercises since last week when US House Speaker Nancy Pelosi visited the island, despite warnings from Beijing about a trip.

Foxconn shares closed 0.9 percent higher ahead of earnings, compared with a 0.7 percent drop in the broader market. They’re up 5.8% year-to-date this year, giving the company a market value of $50.3 billion.

This story has been published from the electronic agency’s feed with no modifications to the text. Only the title has been changed.

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