Hon Hai Precision Industry Co (鴻海) yesterday said that it plans to restore its Chinese operations to full production by the end of the month, while it trimmed its business outlook for this quarter.
“Resuming production and safeguarding the health of our employees remain our top priorities... We have now recovered about 50 percent of our seasonal capacity [in China],” Hon Hai chairman Young Liu (劉揚偉) told an investors’ conference.
While China has largely relaxed curbs on transport and travel as new cases of COVID-19 outside Hubei Province continue to fall, investors are still concerned about a potential shortage of production materials.
However, Liu said that the company’s supply chain remains intact.
“We are doing our best to help our suppliers — [which are often] smaller upstream companies — to secure the resources necessary to maintain production,” he said.
Hon Hai, known internationally as Foxconn Technology Group (富士康科技集團), is a major assembler of Apple Inc products.
The company operates plants across China, including in Shenzhen, Foshan and Zhongshan in Guangdong Province; Kunshan and Huaian in Jiangsu Province; Zhengzhou in Henan Province; Chengdu in Sichuan Province; and Taiyuan and Jincheng in Shanxi Province.
Investors asked about rising prices of packaging materials, multilayer ceramic capacitors and other components, but Liu said that Hon Hai has barely been affected due to its long-established partnerships with suppliers.
However, that is not to say that the company would not see an impact on its revenue this quarter, he said.
“Production was very low in January and February... A lot of orders have since been delayed,” Liu said, forecasting a more than 15 percent sequential decline in sales across Hon Hai’s business segments this quarter.
With sales in the second half of the year expected to be flat from a year earlier, Hon Hai has cut its projections for revenue growth this year to an annual increase of 1 to 3 percent.
“Everything is very difficult for us to predict now ... the current outbreak could become more grave still,” Liu said.
The company still aims to increase gross margin to 10 percent by 2025, while remaining optimistic that the deployment of 5G would boost orders, he added.
Hon Hai, which has announced partnerships with automakers Fiat Chrysler Automobiles NV and Yulon Motor Co (裕隆汽車), said that it plans to launch its first own-brand hybrid vehicles next year.
“We are focusing on the automobile chassis, the components for which we hope to standardize through our designs,” Liu said.
Hon Hai has also set its sights on producing battery modules for electric vehicles, he said.
The company plans to launch electric vehicles through its Fiat and Yulon partnerships by 2022, Liu added.
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