Component shortages would not affect Hon Hai Precision Industry Co’s (鴻海精密) production by more than 10 percent, company chairman Young Liu (劉揚偉) said yesterday, adding that he is “cautiously optimistic” about the information and communications technology business this year.
Speaking at an investors’ conference in Taipei, Liu said the effects of the shortages in the first two months of this quarter were not too obvious, because the company’s customers are major companies.
“Still, we are seeing some gradual changes and are monitoring the situation cautiously,” Liu said. “However, according to our observation, it is not going to be a major factor, maybe under 10 percent.”
Photo: Ritchie B. Tongo, EPA-EFE
The shortages would not run their course until next year, and Hon Hai would pick up market share on major handset products and is ahead of its competitors regarding regional manufacturing, he said.
“We have been in India for a long time, while other competitors are just trying to get in,” Liu said. “As they are finding out, it is not that easy.”
Liu also said Hon Hai would announce new electric vehicle (EV) facilities in “either the US or Mexico” by the end of June.
“Our rule of thumb is that if we want to make 10,000 EVs in one month, we need to invest US$1 billion,” he said, adding that Hon Hai is looking to build pilot and regular production facilities.
The company has targeted EVs as a major growth driver in the years to come, and the Hon Hai-initiated MIH Open Platform Alliance, which has attracted more than 1,300 participants, would help the firm focus on business-to-business sales, while empowering business-to-customer companies, Liu said.
“Hon Hai’s vertical integration is going to be key in the EV space, which does not have a carefully defined division of labor yet,” he said. “With Hon Hai’s proven ability in precision mold making and chemical materials, we will make a new generation of batteries.”
The company reported that net profit last year fell 12 percent year-on-year to NT$101.795 billion (US$3.57 billion), after net profit in the final quarter of last year declined 3.7 percent to NT$45.98 billion.
The company blamed the decline on COVID-19-related problems faced by its subsidiaries.
Total revenue last year increased 0.3 percent annually to NT$5.36 trillion, after fourth-quarter revenue rose 15 percent on the back of robust iPhone 12 shipments, it said.
Earnings per share were NT$7.34 last year, compared with NT$8.32 a year earlier, it added.
The company plans to distribute a cash dividend of NT$4 per share, which suggests a payout ratio of 54.5 percent.
Gross margin was 5.65 percent last year, down from 5.91 percent in 2019.
Liu said a gross margin of 7 percent for this year is “possible.”
Three experts in the high technology industry have said that US President Donald Trump’s pledge to impose higher tariffs on Taiwanese semiconductors is part of an effort to force Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) to the negotiating table. In a speech to Republicans on Jan. 27, Trump said he intends to impose tariffs on Taiwan to bring chip production to the US. “The incentive is going to be they’re not going to want to pay a 25, 50 or even a 100 percent tax,” he said. Darson Chiu (邱達生), an economics professor at Taichung-based Tunghai University and director-general of
Hon Hai Precision Industry Co (鴻海精密) is reportedly making another pass at Nissan Motor Co, as the Japanese automaker's tie-up with Honda Motor Co falls apart. Nissan shares rose as much as 6 percent after Taiwan’s Central News Agency reported that Hon Hai chairman Young Liu (劉揚偉) instructed former Nissan executive Jun Seki to connect with French carmaker Renault SA, which holds about 36 percent of Nissan’s stock. Hon Hai, the Taiwanese iPhone-maker also known as Foxconn Technology Group (富士康科技集團), was exploring an investment or buyout of Nissan last year, but backed off in December after the Japanese carmaker penned a deal
‘LEGACY CHIPS’: Chinese companies have dramatically increased mature chip production capacity, but the West’s drive for secure supply chains offers a lifeline for Taiwan When Powerchip Technology Corp (力晶科技) entered a deal with the eastern Chinese city of Hefei in 2015 to set up a new chip foundry, it hoped the move would help provide better access to the promising Chinese market. However, nine years later, that Chinese foundry, Nexchip Semiconductor Corp (合晶集成), has become one of its biggest rivals in the legacy chip space, leveraging steep discounts after Beijing’s localization call forced Powerchip to give up the once-lucrative business making integrated circuits for Chinese flat panels. Nexchip is among Chinese foundries quickly winning market share in the crucial US$56.3 billion industry of so-called legacy
WASHINGTON POLICY: Tariffs of 10 percent or more and other new costs are tipped to hit shipments of small parcels, cutting export growth by 1.3 percentage points The decision by US President Donald Trump to ban Chinese companies from using a US tariff loophole would hit tens of billions of dollars of trade and reduce China’s economic growth this year, according to new estimates by economists at Nomura Holdings Inc. According to Nomura’s estimates, last year companies such as Shein (希音) and PDD Holdings Inc’s (拼多多控股) Temu shipped US$46 billion of small parcels to the US to take advantage of the rule that allows items with a declared value under US$800 to enter the US tariff-free. Tariffs of 10 percent or more and other new costs would slash such