Hon Hai Precision Industry warned that the global supply crunch that has hit the consumer electronics and car making industries will worsen this quarter, after it weathered component shortages to post better-than-expected quarterly profits.
The world’s largest contract electronics manufacturer and main assembler of iPhones reported net income of NT$28.2 billion ($1bn) in the three months ended March, beating the average NT$24.4bn of adjusted analyst estimates.
Revenue in the second quarter will likely be steady from the previous three months, as growth in its consumer electronics and components divisions is countered by a slowdown in its server and computer divisions, in part because of parts shortages, the company said on Friday.
Component shortages in the second quarter will be more severe than the first quarter
“Component shortages in the second quarter will be more severe than the first quarter,” chairman Young Liu said on a conference call.
He reiterated previous comments that shortages may persist until the second quarter of 2022 and that the impact on its businesses won’t exceed 10 per cent.
Taiwan’s Hon Hai is among a crop of leading companies from Sony to Stellantis that have sounded the alarm over a growing shortage of key components like semiconductors and display drivers vital to product manufacturing.
Mr Liu said last month that component scarcity has worsened since late March and the lead time for some parts is now as long as 52 weeks. Its shares have slipped 20 per cent since rising to a record in March, as the extent of the supply crunch became more evident.
To boost its own semiconductor capabilities amid the prolonged shortage, Hon Hai agreed earlier this month to set up a joint venture with Yageo to develop chips with average selling prices lower than $2.
“This JV will help Hon Hai’s ongoing business transformation into semi/auto business to increase content value with margin expansion,” BofA analysts wrote in a May 6 note, adding the company’s strong sales in the first quarter and April indicate its share gain in Apple business and the server market.
Sales during the quarter jumped 44 per cent to NT$1.35 trillion, in line with analyst estimates, the company said last month, helped by robust demand for Apple’s new 5G devices and other gadgets that help consumers stay connected at home during the pandemic.
While prices of components as well as raw materials have increased, the impact on Hon Hai will be limited, Mr Liu said. The firm still aims to reach gross margins of 7 per cent this year, he added.
But the incessant spread of Covid-19 in India, which is growing in importance as a manufacturing base for Hon Hai, may cloud the firm’s prospects. The company, also known as Foxconn, cut iPhone 12 production in the country by more than 50 per cent after infected workers left its factory, Reuters reported earlier this week.
To reduce its reliance on consumer electronics, the assembler has been casting around for new growth drivers and it’s identified electric vehicles as a key emerging industry.
In recent months, Foxconn has entered into partnerships with an array of car makers including Zhejiang Geely Holding Group, Byton and Fisker to boost its automotive capabilities. Its agreement to develop an EV with Fisker will now include a factory in the US, the companies said on Thursday.
The specs: 2018 Nissan 370Z Nismo
The specs: 2018 Nissan 370Z Nismo
Price, base / as tested: Dh182,178
Engine: 3.7-litre V6
Power: 350hp @ 7,400rpm
Torque: 374Nm @ 5,200rpm
Transmission: Seven-speed automatic
Fuel consumption, combined: 10.5L / 100km
Children who witnessed blood bath want to help others
Aged just 11, Khulood Al Najjar’s daughter, Nora, bravely attempted to fight off Philip Spence. Her finger was injured when she put her hand in between the claw hammer and her mother’s head.
As a vital witness, she was forced to relive the ordeal by police who needed to identify the attacker and ensure he was found guilty.
Now aged 16, Nora has decided she wants to dedicate her career to helping other victims of crime.
“It was very horrible for her. She saw her mum, dying, just next to her eyes. But now she just wants to go forward,” said Khulood, speaking about how her eldest daughter was dealing with the trauma of the incident five years ago. “She is saying, 'mama, I want to be a lawyer, I want to help people achieve justice'.”
Khulood’s youngest daughter, Fatima, was seven at the time of the attack and attempted to help paramedics responding to the incident.
“Now she wants to be a maxillofacial doctor,” Khulood said. “She said to me ‘it is because a maxillofacial doctor returned your face, mama’. Now she wants to help people see themselves in the mirror again.”
Khulood’s son, Saeed, was nine in 2014 and slept through the attack. While he did not witness the trauma, this made it more difficult for him to understand what had happened. He has ambitions to become an engineer.
Killing of Qassem Suleimani
Killing of Qassem Suleimani
COMPANY PROFILE
Name: Qyubic
Started: October 2023
Founder: Namrata Raina
Based: Dubai
Sector: E-commerce
Current number of staff: 10
Investment stage: Pre-seed
Initial investment: Undisclosed
More on Quran memorisation:
How to help
Donate towards food and a flight by transferring money to this registered charity's account.
Account name: Dar Al Ber Society
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IBAN: AE 9805 000 000 000 11 530 734
Bank Name: Abu Dhabi Islamic Bank
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The specs
Engine: 3.0-litre six-cylinder turbo
Power: 398hp from 5,250rpm
Torque: 580Nm at 1,900-4,800rpm
Transmission: Eight-speed auto
Fuel economy, combined: 6.5L/100km
On sale: December
Price: From Dh330,000 (estimate)
Fight card
1. Featherweight 66kg: Ben Lucas (AUS) v Ibrahim Kendil (EGY)
2. Lightweight 70kg: Mohammed Kareem Aljnan (SYR) v Alphonse Besala (CMR)
3. Welterweight 77kg:Marcos Costa (BRA) v Abdelhakim Wahid (MAR)
4. Lightweight 70kg: Omar Ramadan (EGY) v Abdimitalipov Atabek (KGZ)
5. Featherweight 66kg: Ahmed Al Darmaki (UAE) v Kagimu Kigga (UGA)
6. Catchweight 85kg: Ibrahim El Sawi (EGY) v Iuri Fraga (BRA)
7. Featherweight 66kg: Yousef Al Husani (UAE) v Mohamed Allam (EGY)
8. Catchweight 73kg: Mostafa Radi (PAL) v Ahmed Abdelraouf of Egypt (EGY)
9. Featherweight 66kg: Jaures Dea (CMR) v Andre Pinheiro (BRA)
10. Catchweight 90kg: Tarek Suleiman (SYR) v Juscelino Ferreira (BRA)
The specs
AT4 Ultimate, as tested
Engine: 6.2-litre V8
Power: 420hp
Torque: 623Nm
Transmission: 10-speed automatic
Price: From Dh330,800 (Elevation: Dh236,400; AT4: Dh286,800; Denali: Dh345,800)
On sale: Now