Foxconn, the world’s largest contract electronics manufacturer, posted a better-than-expected quarterly profit and forecast its smartphones business would see sustained revenue weakness due to effects of the COVID-19 pandemic, but improving this quarter. The company’s chairman discussed China with investors.
The Taipei-based company, however, is expected by analysts to boost its revenue recovery in the months ahead, underpinned by the expected launch in autumn of a new lineup of iPhones by Apple Inc, a major client of Foxconn’s… the Apple connection would be a growth driver. More than 70% of the new iPhones could be assembled by Foxconn, helping the firm’s revenue resume growth in the fourth quarter, Taipei-based KGI Securities said.
Foxconn Chairman Liu Young-way told an investor conference in Taipei that “it is possible” Foxconn’s gross margin could reach 7% next year, boosted partly by growth from its component business sector, which includes the production of key parts for electronics manufacturing. Its gross margin was 5.91% in the second quarter.
The company also risks getting caught in the China-U.S. trade war, and Liu said Foxconn was working to build two supply chains, one for China and one for the United States, pointing to the company’s investments in Wisconsin, Mexico, Brazil and Southeast Asia as examples of it diversifying around the world.
“The world factory no longer exists,” he said, adding that currently about 30% of the company’s products were made outside China and the ratio could increase “in the future”, although he declined to elaborate.
MacDailyNews Take: China can no longer be the world’s factory. Gee, ya think? The reckoning continues.