Hon Hai Precision Industry Co., the world's largest contract electronics maker, has reported a 24 percent sequential increase in its net profit for the third quarter, citing strong global demand for consumer electronics gadgets.
The iPhone assembler, also known as Foxconn internationally, posted a third quarter net profit of NT$36.98 billion (US$1.33 billion), up 24 percent from NT$29.78 billion in the second quarter, it said at an investor conference Friday.
The company's net profit also rose 20 percent from the NT$30.86 billion posted in the third quarter of 2020.
In the three-month period, Hon Hai's consolidated sales rose 4 percent from a quarter earlier to about NT$1.41 trillion, which was 9 percent higher than the same period a year earlier.
Speaking at the online investor conference, Chairman Liu Young-way (???) said Hon Hai benefited from solid global demand for smartphones in the third quarter, and shipments of cloud-based devices and computers were also as strong as expected.
Only its electronics component division underperformed other product divisions during the quarter, Liu said.
Consumer electronics and smart devices accounted for about 50 percent of Hon Hai's total revenue in the third quarter, cloud and Internet related products made up 23 percent, and computers represented 21 percent, Hon Hai said.
Due to an improving product mix, Hon Hai's profit margin moved higher in the third quarter, but its gross margin -- the difference between revenue and the cost of goods sold -- will likely fall short of 7 percent for the year as a whole, Liu said.
Hon Hai's gross margin rose by 0.27 percentage points from a quarter earlier and by 0.1 percentage points from a year earlier to 6.3 percent in the quarter.
Liu said Hon Hai's sales are expected to grow more than 15 percent in the fourth quarter sequentially and even higher if the raw material shortage plaguing global manufacturers eases.
But the Hon Hai chairman said he expected the shortage to continue at some level into the second half of next year due to interruptions caused by the COVID-19 pandemic.
Liu still believed, however, that the company's gross margin could hit 7 percent in 2022 as the company transitions from a pure contract hardware manufacturer into an entity that integrates its hardware and software strength in the digital era.
Hon Hai has intensified efforts in recent years to carry out its "3 plus 3" initiative, designed to diversify its product mix and boost profit margins.
The "3 plus 3" initiative refers to three emerging industries -- electronic vehicles, robotics and digital health care -- that are being developed through the application of artificial intelligence, semiconductor and communication technologies.
Hon Hai's semiconductor division is expected to generate about NT$70 billion in sales a year at present and rise to above NT$100 billion in 2023.
The company has its own 8-inch wafer lab, and it acquired a 6-inch wafer fab from Macronix International Co. in August. The newly acquired plant is scheduled to start production in the first half of 2022, according to Liu.
EVs, however, are the keystone of Hon Hai's growth ambitions, and it is working on building EV production capacity overseas, Liu said.
Hon Hai is planning to expand its EV production capacity in a plant in Mexico in the first half of next year, and a plant making electronic pick-up trucks in the U.S. should start production as early as in the third quarter of 2022, Liu said.
At the same time, its EV production in the Middle East is expected to kick off in the second half of next year, he said, and Hon Hai is also planning to build EV production lines in India and Europe in the future.
Source: Focus Taiwan News Channel