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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’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, 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.
Foxconn expressed optimism about the upcoming third quarter, anticipating a brighter outlook as they approach the peak shopping season at the end of the year.
On Wednesday, July 5, Taiwan-based leading iPhone assembler Foxconn announced that its second-quarter (Q2) revenue dropped by 14% on the year-on-year timeline. Foxconn is one of the world’s largest contract electronics makers.
According to a statement by Foxconn, the company noted a decline in revenue for smart consumer electronics products, including smartphones, in the second quarter compared to the previous year. However, specific details were not provided.
The revenue for the April-June period stood at T$1.3 trillion ($41.76 billion), pretty much in line with the company’s expectations. For the last month of June 2023, the sales at Foxconn dropped by 19.7% year-on-year. However, the sales numbers stood at T$422.8 billion which makes it the second-highest figure by numbers for the month of June. In a statement recorded by Reuters, the company said:
“With the second half of the year peak season currently underway, operations will gradually ramp up. The outlook for the third quarter, which will be better than the second quarter, is expected to increase at an on quarter pace higher than seen in the previous two years. When compared to the pre-pandemic period, the growth rate is expected to be approximately on par.”
Traditionally, the first half of the year tends to be slower for tech manufacturers in Taiwan, as major electronics companies like Apple often release new products closer to the year-end holiday season. On August 14, Foxconn is set to report its second-quarter earnings.
In the first quarter, Foxconn experienced a significant decline in net profit, plunging by 56%, which was larger than anticipated. This marked their largest quarterly fall in three years. The decline was attributed to a $565 million write-off associated with their 34% stake in Japanese electronics maker Sharp Corp.
Foxconn expressed optimism about the upcoming third quarter, anticipating a brighter outlook as they approach the peak shopping season at the end of the year. Foxconn expects substantial growth in its AI server business driven by strong demand. As people increasingly rely on AI applications like ChatGPT, the need for AI servers is expanding. Foxconn forecasts a three-digit percent increase in the growth of its AI servers in 2023.
While Foxconn shares have seen an 8.6% increase this year, they have not performed as well as the broader Taiwan market, which has risen by 20.1%. On Wednesday, Foxconn shares closed down 1.4%, compared to a 0.5% drop in the broader market.
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.
Heading into a new trading week, here is a quick roundup of the top five stories from the technology, corporate and cryptocurrency sectors that investors would not want to miss out on from the weekend.
1. Elon Musk Worth More Than Two Fellow Billionaires Combined: Tesla Inc. (NASDAQ:TSLA) CEO Elon Musk — the world’s richest person with a net worth of $236 billion — is now worth more than Microsoft Corp. (NASDAQ:MSFT) co-founder Bill Gates and Berkshire Hathaway (NYSE: BRK-A) (NYSE: BRK-B) founder Warren Buffett combined, it was reported, citing the Bloomberg Billionaires Index. Both Gates and Buffett had once topped the list.
2. Apple To “Unleash” Redesigned MacBook Pros Today: Apple Inc. (NASDAQ:AAPL) is expected to unveil the redesigned MacBook Pro laptops with its more powerful in-house chips at its “Unleashed” hardware launch event on Monday, according to leading Apple watcher Mark Gurman. The new MacBook Pro models will be Apple’s first high-end laptops that would not be powered by Intel Corp.’s (NASDAQ:INTC) chips.
3. Huge Dogecoin Rally Predicted: Justin Bennet, a cryptocurrency market analyst with 78,000 Twitter followers, believes that Dogecoin (CRYPTO: DOGE) could rally 500% to 1000% in the coming months if the meme cryptocurrency reclaims the $0.24 level.
4. Apple Supplier Foxconn’s EV Foray: Apple’s Taiwan-based supplier Hon Hai Precision Industry Co. Ltd. (OTC:HNHPF), better known as Foxconn, announced its foray into the EV segment with the launch of three new electric vehicles at its annual tech day on Sunday. The vehicles include a sports utility vehicle named Model C, a Model E sedan and a Model T bus.
5. Bitcoin Rallies Ahead of Futures ETF Launch This Week: Apex cryptocurrency Bitcoin (CRYPTO: BTC) continued to rally on Sunday after reports suggested that a Bitcoin Futures ETF could begin trading this week. The Bitcoin futures ETF from ProShares will trade with the ticker “BITO,” it was reported by Bloomberg. Bitcoin was up 2.7% during the last 24 hours, trading at $62402.69 at press time.
What Else: Among other stories from the weekend, investors would want to check out Twitter Inc. (NYSE:TWTR) CEO Jack Dorsey’s plan for his fintech firm Square Inc. (NYSE:SQ) to build an open-source Bitcoin mining system, the Dogecoin knock-offs that are surging on Sunday, the “Big Short” investor Michael Burry’s disclosure that he is no longer betting against Tesla, and Facebook Inc.’s (NASDAQ:FB) plan to create 10,000 jobs in the European Union as it attempts to build “the metaverse.”