Hon Hai expects revenue to remain stable

MAJOR REVENUE CONTRIBUTOR:
The company said it expects this year’s revenue to grow every year due to the improving outlook for smart consumer electronics.

  • By Lisa Wang / Staff Reporter

Hon Hai Precision Industry Co (鴻海精密) said yesterday that revenue this quarter would be flat compared to last quarter, despite new phone models launched by key customers, as the market faces falling demand.

The iPhone assembler, based in New Taipei City’s Tucheng District (土城), said it was cautious about its business outlook amid growing uncertainty over geopolitical tensions, the surging inflation and COVID-19 surges, but still expects revenue this quarter to top the NT$1.4 trillion ($46.67 billion) reported a year earlier.

The forecast came as the company posted a record net profit of NT$33.29 billion in the second quarter, up 12% year-on-year from NT$29.78 billion.

Photo: Bloomberg

Last quarter revenue grew 12% to NT$1.51 trillion, defying the effects of China’s COVID-19 lockdowns and supply chain constraints.

Earnings per share increased to NT$2.4 last quarter from NT$2.15 a year earlier and NT$2.12 a quarter earlier.

With clearer visibility for the remainder of this year, Hon Hai expects this year’s revenue to increase from last year, rather than the flat performance it forecast in May.

Photo: screenshot on the Internet

“The smart consumer electronics outlook update is the main reason for upgrading our full-year revenue outlook,” Hon Hai Chairman Young Liu (劉揚偉) said during the meeting. of an online investor conference.

Smart consumer electronics, mainly smartphones, is the main contributor to Hon Hai’s revenue.

This year, revenue from network devices and cloud-based computing products would increase compared to last year, the company said.

“Although data center demand has been a concern lately, our customers are still showing increasing demand for servers, especially from cloud service providers. This segment remains the most promising area this year,” Liu said. “We expect double-digit percentage growth this year on an annual basis.”

In response to questions from investors about Hon Hai’s electric vehicle business, Liu said the company plans to add five new customers, including two from traditional automakers and three from auto start-ups.

Hon Hai on Tuesday signed a new agreement with Monarch Tractor to manufacture electric tractors and batteries at Hon Hai’s facilities in Ohio, starting in the first quarter of next year.

The company plans to fully utilize the Ohio plant in 2024. The facilities have an installed capacity of 600,000 units per year.

With new orders coming in, Hon Hai is confident that its goal of winning 5 percent of the global EV market by 2025 is achievable, Liu said, adding that by then, EV revenue of Hon Hai would reach NT$1 trillion. .

Liu said Hon Hai’s investment in China’s Tsinghua Unigroup (紫光集團) was purely a financial investment, as Tsinghua Unigroup started making decent profits following corporate restructuring and splitting memory chipmakers Yangtze Memory Technologies Co (長江存儲) and Wuhan Xinxin Semiconductor Manufacturing Co. (武漢新芯).

Hon Hai has a contingency plan if regulators block investment, Liu added.

The Investment Commission said yesterday it was reviewing Hon Hai’s 5.38 billion yuan ($798.5 million) investment project.

The commission asked Hon Hai to submit more information and help clarify the complicated investment structure involved.

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