Taiwan’s Foxconn, the world’s largest electronics contractor, raised its annual business vision on Monday due to strong sales of smartphones and servers despite concerns over declining demand due to rising inflation. Like other global manufacturers, the Taiwanese company has been hit by a severe shortage of chips, which has hampered the production of smartphones including its major customer Apple, in part due to the closure of COVID-19 in China.
But the company said in a statement late Monday that sales in June had risen 31 percent from a year earlier to a month high, due to proper supply chain management and rising consumer electronics sales. Smartphones make up the bulk of the revenue. Foxconn’s June sales better than expected come at a time when investors are worried about a decline in demand for technology during a slowdown in major markets due to the high inflation and the Ukrainian war. Chip stocks around the world fell on Friday after a memory chip manufacturer Micron Technology Inc. predicted Thursday more than expected for the current quarter and said the market had “been very weak in a very short period of time.”
Foxconn said it is optimistic about its business in the third quarter, adding that it could see “significant growth” compared to last year.In 2022, Foxconn said the vision had improved compared to previously unplanned growths, without giving details. The company, officially named Hon Hai Precision Industry Co Ltd, said it had seen a double annual growth in sales of communications servers and products so far this year.The company said COVID-19 regulators in China have had a limited impact on its production as they keep workers in place in a “closed” system.
Analysts at Daiwa Capital Markets in Taipei say in a report that the need for servers from US cloud service providers has helped boost two-digit growth in the sector. They expected Foxconn’s operating profit to grow by 12-19% this year. Analysts at Morgan Stanley say Foxconn’s third-quarter direction showed strong demand for cloud servers and iPhone assembly will continue. The company’s shares rose about 3% in trading on Tuesday morning, performing much better than the broader market which increased by about 1%. They have fallen by almost 1% so far this year, giving the company a market capitalization of $ 46.52 billion.
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