Hon Hai Precision Industry Co (鴻海精密), a key iPhone assembler, yesterday said supply chain turbulence in China would improve in the second half of this year as Shanghai lifts COVID-19 restrictions at an orderly pace.
The company, based in New Taipei City’s Tucheng District (土城), said “logistics posed a great challenge,” although most of its more than 30 manufacturing campuses in China have not been affected by Beijing’s strict “zero COVID-19” policy and a two-month lockdown in Shanghai.
Hon Hai said it has stepped up efforts to arrange workers’ accommodations to maintain normal production under the so-called “closed loop” model.
Photo: CNA
The company is also extending “bubble” arrangements of food and accommodation to its other Chinese manufacturing sites to be better prepared for any developments regarding the pandemic.
“Overall, the impact is very limited as you can tell from our April revenue. May [performance] looks better than our expectations,” Hon Hai chairman Young Liu (劉揚偉) told shareholders at its annual general meeting.
“It feels like the impact on supply chains is easing gradually in Shanghai and the neighboring areas. Looking into the second half, things are apparently moving toward a positive direction,” Yang said. “We are confident that supply chains are stabilizing.”
With supply chain visibility cleared up, Hon Hai expects its business outlook for the current quarter and for the whole year to be stronger than it had expected at the beginning of the year, Liu said.
Two weeks ago, Liu reiterated the company’s expectation of flat revenue this year, compared with NT$5.99 trillion (US$206.1 billion) last year.
Second-quarter revenue would also be little changed from the previous quarter, he said at the time.
To build resilient chip supplies for its electric vehicle customers, Hon Hai yesterday said it is accelerating semiconductor manufacturing capacity deployment worldwide.
“We are refocusing on electric vehicle [semiconductors]. We hope our electric vehicle customers will not have to worry about what they are worried about now,” Liu said.
Hon Hai aims to ramp up production of microcontrollers, small integrated circuit chips and silicon-carbide (SiC) chips used in vehicles within three years, he said.
SiCs would also be used in on-vehicle charging and charging piles, he added.
The company also aims to produce energy-efficient power modules for vehicles and optical phased array Lidar in 2024, he said.
“Our goal is to offer a full selection of small integrated circuit chips for cars, designed and produced by Hon Hai, for customers in 2025,” Liu said. “We want to be the world’s first electronics manufacturing service provider that is capable of fully supplying key components and subsystems used in cars.”
Hon Hai operates a 6-inch fab and two 8-inch fabs, and is expanding its product offering to include metal-oxide semiconductor field-effect transistors, a device used to switch or amplify electronic signals.
Hon Hai shareholders yesterday approved the distribution of a cash dividend of NT$5.2 per common share. That represents a payout ratio of about 52 percent, based on the company’s earnings per share of NT$10.05.
Shareholders also approved the listing of shares of Bharat FIH Ltd, a wholly owned subsidiary of FIH Mobile Ltd (Cayman) in India. Hon Hai is the parent company of FIH Mobile.
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