Foxconn International Holdings Ltd (富士康控股), the world’s largest contract maker of mobile phones, said it expects profitability to come under pressure this year because of rising competition and increased development costs.
“It’s a tough operating environment,” Foxconn chairman Samuel Chin (陳偉良) said after a shareholders’ meeting in Hong Kong yesterday. “We’re not immune — it definitely impacts us.”
Foxconn, the worst-performing stock in Hong Kong’s benchmark Hang Seng Index this year, is seeking more business from customers including Nokia Oyj and Samsung Electronics Co, the world’s two biggest handset companies, to compensate for lower sales to Motorola Inc.
The Shenzhen, China-based company is boosting spending to develop so-called smartphones, which allow users to edit documents and send e-mails.
Motorola, Foxconn’s biggest customer in 2006, is still “having difficulties” and will “continue to impact” the Hong Kong-listed company, Chin said.
Foxconn got higher orders from “all other customers” to help offset lower sales to the US company last year, Chin said.
Foxconn’s second-half profit last year declined 4.5 percent to US$397.4 million as Schaumburg, Illinois-based Motorola’s full-year handset sales fell 33 percent last year.
The US company accounted for 53 percent of Foxconn’s sales in 2006, Morgan Stanley analyst Jasmine Lu (呂智穎) wrote in a report in March.
Foxconn should have significant revenue growth this year as handset companies outsource more production, Chin said.
The company’s shares fell 1.9 percent to HK$9.70 (US$1.24) at the close of trading in Hong Kong yesterday, extending their decline to 45 percent this year. The Hang Seng Index dropped 2.3 percent.
The contract manufacturer plans to increase its spending on engineering 50 percent this year as it offers more smartphones, Chin said.
Foxconn has hired about 800 engineers this year for its smartphones division, he said, adding to the company’s total of 5,514 at the end of last year.
Foxconn’s research and development spending rose 62 percent to US$100.9 million last year after the company added engineers, it said in April.
Foxconn, a unit of Taiwan’s Hon Hai Precision Industry Co (鴻海精密), plans to start production in Debrecen, Hungary, in August, its second site in the country, Chin said.
The Hong Kong-listed company, which at present manufactures mostly in Shenzhen, will also start volume production at Langfang and Taiyuan in northern China this year, he said.
ISSUES: Gogoro has been struggling with ballooning losses and was recently embroiled in alleged subsidy fraud, using Chinese-made components instead of locally made parts Gogoro Inc (睿能創意), the nation’s biggest electric scooter maker, yesterday said that its chairman and CEO Horace Luke (陸學森) has resigned amid chronic losses and probes into the company’s alleged involvement in subsidy fraud. The board of directors nominated Reuntex Group (潤泰集團) general counsel Tamon Tseng (曾夢達) as the company’s new chairman, Gogoro said in a statement. Ruentex is Gogoro’s biggest stakeholder. Gogoro Taiwan general manager Henry Chiang (姜家煒) is to serve as acting CEO during the interim period, the statement said. Luke’s departure came as a bombshell yesterday. As a company founder, he has played a key role in pushing for the
China has claimed a breakthrough in developing homegrown chipmaking equipment, an important step in overcoming US sanctions designed to thwart Beijing’s semiconductor goals. State-linked organizations are advised to use a new laser-based immersion lithography machine with a resolution of 65 nanometers or better, the Chinese Ministry of Industry and Information Technology (MIIT) said in an announcement this month. Although the note does not specify the supplier, the spec marks a significant step up from the previous most advanced indigenous equipment — developed by Shanghai Micro Electronics Equipment Group Co (SMEE, 上海微電子) — which stood at about 90 nanometers. MIIT’s claimed advances last
CROSS-STRAIT TENSIONS: The US company could switch orders from TSMC to alternative suppliers, but that would lower chip quality, CEO Jensen Huang said Nvidia Corp CEO Jensen Huang (黃仁勳), whose products have become the hottest commodity in the technology world, on Wednesday said that the scramble for a limited amount of supply has frustrated some customers and raised tensions. “The demand on it is so great, and everyone wants to be first and everyone wants to be most,” he told the audience at a Goldman Sachs Group Inc technology conference in San Francisco. “We probably have more emotional customers today. Deservedly so. It’s tense. We’re trying to do the best we can.” Huang’s company is experiencing strong demand for its latest generation of chips, called
GLOBAL ECONOMY: Policymakers have a choice of a small 25 basis-point cut or a bold cut of 50 basis points, which would help the labor market, but might reignite inflation The US Federal Reserve is gearing up to announce its first interest rate cut in more than four years on Wednesday, with policymakers expected to debate how big a move to make less than two months before the US presidential election. Senior officials at the US central bank including Fed Chairman Jerome Powell have in recent weeks indicated that a rate cut is coming this month, as inflation eases toward the bank’s long-term target of two percent, and the labor market continues to cool. The Fed, which has a dual mandate from the US Congress to act independently to ensure