Hon Hai Precision Industry Co (鴻海精密), which makes Apple Inc’s smartphones and tablet computers, aims to cut its work force by 30 percent within the next five years by replacing manual labor with automated systems to reduce costs, the Chinese-language Next Magazine reported yesterday.
The stock price of Hon Hai advanced 1.32 percent to close at NT$69 yesterday, ending four straight days of losses amid optimism over the launch of Apple’s new generation iPhone, with the US firm sending out invitations to the media for an iPhone-related event on Oct. 5.
Overseas fund managers sold Hon Hai shares for a second day yesterday, with net sales reaching 9.42 million shares at the close.
Next Magazine said Hon Hai chairman Terry Gou (郭台銘) had set an internal target of cutting the firm’s work force from 950,000 to 600,000 during a five-year period. The weekly did not mention its source.
Hon Hai booked NT$90.7 billion (US$2.98 billion) in employee payrolls in the first six months of this year, a spike from NT$5.87 billion a year ago, as the number of workers ballooned to current levels from 700,000 partly because of the company’s massive factory relocation to China’s inland provinces from its coastal areas, the report said.
Hon Hai yesterday dismissed Next Magazine’s report, saying it was incorrect, according to a company filing to the Taiwan Stock Exchange.
“Streamlining production is a measure that the company has been adopting to ensure long-term success,” company spokesman Edmund Ding (丁祈安) said in the filing.
Ding also said Hon Hai did not have any plan to raise capital by issuing global depositary receipts, as reported by Next Magazine.
Gou unveiled the five-year plan in June, saying the company would expand its production automation system and upgrade existing factories to reduce manual labor.
“Chinese labor is no longer cheap and young people born in the 1990s no longer want to take tedious jobs at production lines. This [rising labor cost in China] will greatly impact on exporters only taking advantage of cheap labor there,” he said at the time.
Factory upgrades along with improved production yields would help boost the company’s falling gross margin, Gou said, adding that he expected margins to recover in the second half from the first half.
Hon Hai’s relocations plans in China are scheduled to be completed by the end of the year, which should help lift margins as costs drop, he said.
The firms’ gross margin fell to 6.26 percent in the first six months of the year, compared with 8.35 percent in the same period last year, according to the company’s financial statements submitted to the Taiwan Stock Exchange.
Net profit declined about 18 percent to NT$27.38 billion, or NT$2.58 a share, in the first half, from NT$33.57 billion, or NT$3.61 a share, a year ago, the statements showed.
BUSINESS UPDATE: The iPhone assembler said operations outlook is expected to show quarter-on-quarter and year-on-year growth for the second quarter Hon Hai Precision Industry Co (鴻海精密) yesterday reported strong growth in sales last month, potentially raising expectations for iPhone sales while artificial intelligence (AI)-related business booms. The company, which assembles the majority of Apple Inc’s smartphones, reported a 19.03 percent rise in monthly sales to NT$510.9 billion (US$15.78 billion), from NT$429.22 billion in the same period last year. On a monthly basis, sales rose 14.16 percent, it said. The company in a statement said that last month’s revenue was a record-breaking April performance. Hon Hai, known also as Foxconn Technology Group (富士康科技集團), assembles most iPhones, but the company is diversifying its business to
Apple Inc has been developing a homegrown chip to run artificial intelligence (AI) tools in data centers, although it is unclear if the semiconductor would ever be deployed, the Wall Street Journal reported on Monday. The effort would build on Apple’s previous efforts to make in-house chips, which run in its iPhones, Macs and other devices, according to the Journal, which cited unidentified people familiar with the matter. The server project is code-named ACDC (Apple Chips in Data Center) within the company, aiming to utilize Apple’s expertise in chip design for the company’s server infrastructure, the newspaper said. While this initiative has been
GlobalWafers Co (環球晶圓), the world’s No. 3 silicon wafer supplier, yesterday said that revenue would rise moderately in the second half of this year, driven primarily by robust demand for advanced wafers used in high-bandwidth memory (HBM) chips, a key component of artificial intelligence (AI) technology. “The first quarter is the lowest point of this cycle. The second half will be better than the first for the whole semiconductor industry and for GlobalWafers,” chairwoman Doris Hsu (徐秀蘭) said during an online investors’ conference. “HBM would definitely be the key growth driver in the second half,” Hsu said. “That is our big hope
The consumer price index (CPI) last month eased to 1.95 percent, below the central bank’s 2 percent target, as food and entertainment cost increases decelerated, helped by stable egg prices, the Directorate-General of Budget, Accounting and Statistics (DGBAS) said yesterday. The slowdown bucked predictions by policymakers and academics that inflationary pressures would build up following double-digit electricity rate hikes on April 1. “The latest CPI data came after the cost of eating out and rent grew moderately amid mixed international raw material prices,” DGBAS official Tsao Chih-hung (曹志弘) told a news conference in Taipei. The central bank in March raised interest rates by