Foxconn sees sluggish demand for electronics within the global economy for the rest of the year and thus it has reduced its revenue estimates.
On Monday, August 14, Apple supplier Foxconn announced its second-quarter (Q2) earnings beating market estimates. These strong Q2 earnings came on the backdrop of a booming artificial intelligence sector. However, the company still maintains a cautious outlook for the year 2023 amid global uncertainties.
Foxconn in Q2 2023
Foxconn’s net profit for the second quarter fell by 1%, but it was still higher than what analysts predicted. The company’s net profit went down to T$33 billion ($1.0 billion) in the April-June period, compared to T$33.29 billion from the previous year. This result was better than the average prediction of T$25.57 billion profit from 13 analysts, according to Refinitiv.
Foxconn also mentioned that it anticipates a slight decrease in revenue for its smart consumer electronics products in the third quarter. This category includes smartphones and contributes about half of Foxconn’s total revenue.
The Taiwan-based largest electronics manufacturer worldwide downgraded its outlook for the full-year revenue of 2023. With this, Foxconn joins the list of companies that have been facing the heat of a sluggish recovery in China and a weak global economy.
Chairman Liu Young-way described Foxconn’s outlook as “relatively cautious”. He added:
“At present, there are many external variables: global monetary policy tightening, geopolitical tensions, inflation and other uncertainties.”
At the earnings briefing, Liu said that he sees a lot of potential in India wherein they are rapidly expanding their manufacturing capabilities. Additionally, the company has committed “several billion dollars in investment” which it calls just the beginning.
However, just during the last month of July, Foxconn pulled out of a joint venture with Vedanta in India. But the company is still keen on applying for different incentives under the country’s chip production plan.
Foxconn Gearing for an EV Push and AI
Foxconn, a company that makes things like phones and electronics, might start making batteries for electric cars at its factory in Wisconsin. The electronics manufacturer sees a great opportunity in this rapidly evolving EV market, however, it didn’t give many details regarding the same.
With the rise of generative AI apps, Foxconn is getting more popular for servers in this area. They think they can work more closely with customers in North America. This is good news because demand for smartphones and computers has been a bit slower. “AI growth has been strong, but we have not seen any pick-up for other products,” the company noted.
Before announcing its results, Foxconn, the company responsible for assembling about 70% of iPhones, experienced a 1.4% increase in its shares. In contrast, the main market saw a 1.3% decrease. Foxconn’s shares have risen by 10% in total this year.
Bhushan is a FinTech enthusiast and holds a good flair in understanding financial markets. His interest in economics and finance draw his attention towards the new emerging Blockchain Technology and Cryptocurrency markets. He is continuously in a learning process and keeps himself motivated by sharing his acquired knowledge. In free time he reads thriller fictions novels and sometimes explore his culinary skills.