Foxconn increases annual forecast for 2022 amidst strong tech demand

Foxconn, a prominent contract electronics manufacturer, has reportedly increased its full-year business outlook as a result of robust sales of servers and smartphones, despite concerns over demand drops due to rising inflation.

The Taiwanese company has suffered from a significant chip scarcity like other international manufacturers that have hampered the production of smartphones, particularly those for its major client Apple, in part because of COVID-19 lockdowns in China.

However, the business claimed in a statement that effective supply chain management and soaring consumer electronics sales were to account for June revenues increasing 31% from a year earlier to a record high for the month. Most of the company’s revenue comes from smartphones.

Foxconn's higher-than-anticipated June sales came as investors worry about declining electronics demand during a slowdown in major markets brought on by high inflation and the conflict in Ukraine.

After memory chip manufacturer Micron Technology Inc. forecasted significantly lower-than-expected revenue for the present quarter, chip stocks all over the world fell on Friday. But Foxconn expressed optimism for its company in the third quarter and added that it might experience a substantial increase when compared to the same period last year.

Without giving further specifics, Foxconn said that the forecast for 2022 had changed from earlier predictions of no growth.

The business, formerly known as Hon Hai Precision Industry Co. Ltd., said that so far this year, sales of servers and telecommunications products have increased by double digits annually. The company claims that while COVID-19 controls in China maintained employees on-site in a "closed-loop" system, it only had a little impact on the company’s production processes.

If market speculations are right, the demand for servers from U.S.-based cloud service providers contributed to the industry's double-digit rise, thus anticipating a 12–19% increase in Foxconn's operating profit this year.

Source Credit:

https://www.aljazeera.com/economy/2022/7/5/taiwans-foxconn-raises-full-year-outlook-on-strong-tech-demand-2