Despite concerns about slowing demand due to rising inflation, Taiwan’s Foxconn, the world’s largest contract electronics manufacturer, raised its full-year business outlook on Monday. The Taiwanese firm, like other global manufacturers, has been dealing with a severe chip shortage. It has hampered smartphone production, including for its major client Apple, in part due to COVID-19 lockdowns in China.
However, the company said in a late-Monday statement that June sales increased 31 percent year on year to a record high. All thanks to proper supply chain management and rising consumer electronics sales. The majority of its revenue comes from smartphones. Foxconn’s higher-than-expected June sales come at a time when investors are concerned about slowing tech demand. During the midst of a downturn in major markets caused by high inflation and the Ukraine war.
Global chip stocks dropped
Global chip stocks fell on Friday after memory chip maker Micron Technology forecast significantly lower-than-expected revenue for the current quarter. On Thursday, it stated that the market had “weakened considerably in a very short period of time.” Foxconn said it was optimistic about its business in the third quarter. Thus, predicting “significant growth” over the previous year.
Foxconn said the outlook for 2022 has improved from earlier expectations of no growth. But no details were provided. So far this year, the company, formally known as Hon Hai Precision Industry. It has reported double-digit yearly growth in sales of servers and telecommunications products.
According to the company, COVID-19 controls in China had a limited impact on its production. As it kept workers on-site in a “closed loop” system. Analysts at Daiwa Capital Markets in Taipei stated in a report that demand for servers from US-based cloud service providers aided the sector’s double-digit growth. They predicted that Foxconn’s operating profit would increase by 12-19% this year.
According to Morgan Stanley analysts, Foxconn’s upbeat third-quarter guidance demonstrated that strong demand for cloud servers and iPhone assembly will continue. The stock rose about 3% in early trading on Tuesday, outperforming the broader market, which was up about 1%. They have fallen nearly 1% this year, giving the company a market value of $46.52 billion.
