Apple supplier Foxconn’s profit beats estimates ahead of new iPhones
Apple -- which accounts for roughly half the Taiwanese company’s revenue -- typically introduces new mobile devices in September each year but the iPhone 12 and iPhone 12 Pro went on sale in late October, while two other models have only become available this month.
Key iPhone assembler Hon Hai Precision Industry Co.’s third-quarter profit beat estimates, underscoring how the Taiwanese manufacturer is extending its post-Covid-19 recovery amid demand for home computing and cloud equipment.
The company, also known as Foxconn Technology Group, said net income for quarter ended in September was NT$30.9 billion ($1.1 billion), against average analyst estimates of NT$28.7 billion. Hon Hai on Thursday forecast that revenue growth for the October-December period will be flattish from a year ago, despite a likely boost in orders from Apple Inc., which pushed back the launch of its flagship handsets this year.
Apple -- which accounts for roughly half the Taiwanese company’s revenue -- typically introduces new mobile devices in September each year but the iPhone 12 and iPhone 12 Pro went on sale in late October, while two other models have only become available this month. The new handsets may prop up Hon Hai in the fourth quarter, with Apple’s Chief Executive Tim Cook saying in late October the response to the 5G iPhone lineup and other new devices has been “tremendously positive.” The Taiwanese company said Thursday its consumer electronics and components businesses are expected to grow in the three months ended December, though sales at its computer division will decline.
“The market has been responding well to new products this year,” Chairman Young Liu told analysts. “In the consumer electronics business, while there are still various macro uncertainties, consumer demand still looks strong” for the fourth quarter. The company’s performance will likely be steady for the full year while revenue in 2021 may climb by single digits, he added.
Hon Hai shares have shed roughly 10% of their value this year. The stock took a beating early on and the manufacturer struggled through much of February, when the Covid-19 outbreak disrupted transportation and logistics and delayed the return of the hundreds of thousands of workers it needed to assemble iPhones and other electronics in China. The China-based tech supply chain has since bounced back after Beijing got the virus under control.
Sales for the third quarter totaled NT$1.29 trillion, down roughly 7% from a year earlier.
Apple on Tuesday introduced new Macs carrying its own silicon. The new laptops may be a further boost for Hon Hai, which is reportedly assembling two of the new models, the 13-inch Macbook Air and Macbook Pro.
However, Apple and its suppliers including Hon Hai may face challenges in fulfilling demand in the holiday season. The world’s most valuable company is grappling with a shortage of chips that manage power in iPhones and other devices, people with knowledge of the matter have said. Apple posted a 21% slump in sales of the handset last quarter ahead of the new launches and declined to provide guidance for the holiday quarter citing lingering pandemic-related uncertainties.
To reduce it dependence on Apple, Hon Hai is looking to emerging tech including robotics and automotive business for growth. It unveiled its first electric vehicle chassis in October and is also planning a joint venture with Fiat Chrysler Automobiles NV aimed at the China market. Hon Hai’s open electric vehicle platform is expected to start contributing to its revenue from 2022, Liu said.
Hon Hai has also made a bid for Malaysian chipmaker SilTerra, Liu said, without disclosing the amount. He added a decision may be reached by the end of this year.