Hon Hai Precision Industry Co (鴻海精密) yesterday predicted flattish revenue for this year, as major central banks’ monetary tightening could affect consumer spending on electronic devices.
The iPhone assembler’s cautious guidance came after it reported its best earnings in about 15 years, with net profit last year expanding 2 percent to NT$141.48 billion (US$4.62 billion) from NT$139.32 billion in 2021. Earnings per share rose to NT$10.21 from NT$10.05 the previous year.
Last year’s revenue expanded 11 percent to a record NT$6.63 trillion, but gross margin was unchanged at 6.04 percent after fourth-quarter margin slid to 5.66 percent from 6.03 percent a year earlier due to increases in COVID-19-related spending and lower utilization at its Zhengzhou factory in China, it said.
Photo: Annabelle Chih, Reuters
The company still aims to meet its gross margin target of 10 percent for 2025, it added.
“As we mentioned during the last conference, we have a neutral view of the outlook for the information and communications technology industry in 2023. The high-speed growth period induced by the COVID-19 pandemic has ended,” Hon Hai chairman Young Liu (劉揚偉) told investors at an online conference.
With macroeconomic conditions worsening, the company is “relatively conservative” about order visibility, Liu said.
Revenue this year would be flat from last year, he said.
The smartphone segment is likely to be the only product line that would see a mild decline this year, given a higher base last year, Liu said.
However, the company expects robust growth for cloud-based servers this year, benefiting from the rise of ChatGPT, which requires high-performance servers to collect and analyze data, Liu said.
Hon Hai last year doubled its shipments of artificial intelligence servers, which contributed 20 percent to its annual server revenue, he added.
The company also expects to see significant growth in shipments of computer products and components, thanks to market share gains and increasing orders, Liu said.
For this quarter, revenue would contract on a quarterly basis due to a seasonal slowdown, but the decline would be smaller than usual, as the company’s Zhengzhou factory, its biggest smartphone center, has resumed normal operations, he said.
Hon Hai is also stepping up its electric vehicle (EV) deployment this year in North America amid expectations of growth in electric vehicles and automotive components, the company said.
The company is to ramp up EV production at its Ohio factory as it aims to ship its first batch of e-sports utility vehicle Model Cs this year, it added.
Automotive components are forecast to generate between NT$50 billion and NT$100 billion in revenue this year, up from NT$20 billion last year, as Hon Hai is adding battery packs and other components to its product lineup, Liu said.
The company reiterated its target of generating NT$1 trillion from its EV business in 2050.
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