Hon Hai Precision Industry Co (鴻海精密) reported third-quarter earnings of NT$36.98 billion (US$1.33 billion), up 24 percent quarter-on-quarter and 20 percent year-on-year, beating its own and analysts’ expectations, the company said yesterday.
Strong sales to their biggest customer, Apple Inc, which released its latest iPhone in the period, drove the gains.
Earnings per share rose to NT$2.67 last quarter, up from NT$2.23 in the third quarter of last year.
Photo: Ann Wang, Reuters
“The reason we were able to beat our expectations was the strong demand for our smart handset products, while cloud and personal computing sales were as expected,” Hon Hai chairman Young Liu (劉揚偉) told a virtual investors’ conference. “Sales of components and other products were slightly down due to the parts shortage crisis.”
The company expects the shortages to continue through the first half of next year, Liu said.
“I expect Hon Hai’s sales to grow by more than 15 percent quarter-on-quarter, because we are entering the busy season, but our growth is limited by the parts shortage,” he said. “On a year-on-year basis, I expect that fourth-quarter [revenue] would slide by 3 to 15 percent.”
In addition to production being limited by shortages, fourth-quarter sales last year were also unusually high due to COVID-19-related delays pushing sales into the following quarter.
Consumer electronics are expected to slide 15 percent year-on-year, while cloud products should remain flat compared with last year, he said.
However, cloud service-related products would “continue growth,” he said.
As for electric vehicles (EVs), Liu said he expects Hon Hai to develop production facilities in Mexico to accommodate additional production.
In the US, pickup truck models would be in production “as early as the third quarter of 2022,” he said.
In the second half of next year, Hon Hai would begin its Middle East EV project, while it has plans to establish production lines in Europe and India through “lean investments,” Liu said.
“In the first half of 2022, we will start selling the E-bus in Taiwan, and work with e-scooter company Gogoro on battery module and battery swap station production,” he said.
“In Mexico, we will expand our current automotive production facilities,” he said. “In the second half of 2022, our collaboration with Lordstown Motors should yield fruit with its Endurance pickup truck that can start contributing to revenue as soon as the third quarter.”
Hon Hai’s auto component business has so far this year generated revenue of more than NT$10 billion, Liu said, adding that he expects further growth next year.
Hon Hai’s goal to lift gross margin to 10 percent by 2025 remains unchanged, he said.
STEADY: Prices are to rebound following inventory rebuilding demand, TrendForce said, with Samsung Electronics Co further trimming capacity as it slashes DDR4 lines The contract prices of DRAM chips are to rise by as much as 18 percent sequentially this quarter — the first price upticks in about eight quarters — driven mainly by inventory rebuilding demand for DRAM chips used in mobile devices and PCs, TrendForce Corp (集邦科技) projected yesterday. The price rebound is led by a quarterly increase of mobile DRAM chips, which are to climb between 13 percent and 18 percent quarter-on-quarter this quarter, which has not been seen since the fourth quarter of 2021, the Taipei-based market researcher predicted. Likewise, the price of mainstream PC DDR4 DRAM is expected to bounce
CHINA NOT A FRIEND: ‘Newsflash: Democracy is good for your businesses,’ US Secretary of Commerce Gina Raimondo said as she gave a speech at a national defense forum US Secretary of Commerce Gina Raimondo on Saturday urged lawmakers, Silicon Valley and US allies to stop China from getting semiconductors and cutting-edge technologies key to national security. Speaking at an annual national defense forum in Simi Valley, California, Raimondo called Beijing “the biggest threat we’ve ever had” and stressed that “China is not our friend.” The world’s top two economies are locked in a fierce commercial and geopolitical rivalry, in which her department plays a leading role. In October, Raimondo unveiled a series of restrictions on the export of advanced chips to China, including those used in the development of artificial intelligence
SOLID FOUNDATION: Given its decades of expertise in megatronics, manufacturing and robotics, Japan has the wherewithal to create its own AI, Jensen Huang said Nvidia Corp plans to help build an artificial intelligence (AI) tech-related ecosystem in Japan to meet demand in a country eager to gain an edge in this emerging technology. The US company will seek to partner with Japanese research organizations, companies and start-ups to build factories for AI, Nvidia CEO Jensen Huang (黃仁勳) said yesterday during opening remarks in a meeting with Japanese Minister of Economy, Trade and Industry Yasutoshi Nishimura. The company is to set up an AI research laboratory, and invest in local start-ups and educate the public on using AI, Huang said. Huang earlier this week met with Japanese Prime
A Hong Kong court postponed a court hearing on troubled Chinese property developer Evergrande Group’s (恆大集團) winding-up petition scheduled for yesterday until Jan. 29. Evergrande is trying to win support from its creditors for a plan to restructure more than US$300 billion in debt to stave off liquidation. The company’s lawyer told the court it was requesting an adjournment to “refine” its new debt restructuring plan. The Hong Kong High Court has postponed the hearing over Evergrande’s potential liquidation several times. Judge Linda Chan (陳靜芬) had said in October that yesterday’s hearing would be the last before a decision is handed down. Chan