Apple Inc supplier Foxconn reported on Monday a 1% drop in second-quarter net profit, as global economic woes hurt demand for smart consumer electronics.
The Taiwanese company, the world’s largest contract electronics maker, said net profit for the April-June quarter slipped to T$33 billion from a revised T$33.29 billion in the same period the previous year.
It was better than an average forecast of T$25.57 billion profit from 13 analysts, according to Refinitiv.
Foxconn, the prominent Taiwanese technology giant and a crucial supplier for Apple, has revealed its intention to potentially invest “several billion dollars” in India. This move is part of Foxconn’s strategy to diversify its manufacturing operations away from China.
Foxconn, also known as Hon Hai Precision Industry, holds the title of being the world’s largest contract electronics manufacturer and is responsible for assembling devices for various companies, most notably Apple’s iPhones.
Although it operates across more than twenty countries, a significant portion of its activities are centred in China. However, the company aims to lessen this reliance and has been making headlines with reports of substantial investments in India.
Young Liu, the Chairman of Foxconn, expressed during an earnings call that considering India’s promising market size, an initial investment of several billion dollars is just the starting point. This statement came in response to a question about the company’s rumoured $2 billion investment plan in India.
In May, Foxconn made news by purchasing a considerable plot of land on the outskirts of Bengaluru, a major tech hub in India, for $37 million.
Presently, Foxconn operates around nine production campuses and has over 30 factories in India. These contribute to an annual business turnover of roughly $10 billion, as stated by Liu.
The company has larger aspirations for its India operations. It plans to extend its activities to encompass “critical components” for consumer electronics and electric vehicles. This expansion aims to enhance its competitive edge. Although specific details are not provided, Liu indicated that construction has commenced this year, with shipping of critical components expected to begin next year. These operations will span three states in India.
Apart from its primary focus on contract manufacturing, Foxconn has expanded its scope into the semiconductor sector as well. Although the joint venture it had with Vedanta, under the leadership of Anil Agarwal, has come to an end, Foxconn’s dedication to India remains unwavering. The company is proactively seeking fresh partnerships to propel its semiconductor endeavours in the country. Insider information indicates that Foxconn is contemplating the creation of several semiconductor fabrication lines in India.
In the latter part of July, Foxconn’s Chairman, Young Liu, took part in the opening keynote of the second edition of Semicon India, which was held in Gandhinagar, Gujarat. Sharing the stage with Indian Prime Minister Narendra Modi and Sanjay Mehrotra, President and CEO of Micron, as well as other industry leaders, Liu expressed, “Taiwan is and will be your most trusted and reliable partner.”
In addition to its activities in India, Foxconn is strongly dedicated to implementing the Build-Operate-Lease (BOL) strategy across various Southeast Asian countries, including Vietnam, Thailand, and Indonesia. This strategic initiative is designed to reinforce the supply chains of local partners and elevate their competitiveness. Simultaneously, the company is actively involved in collaborating with its partners on a global scale, with the objective of expanding its presence in local markets and jointly accomplishing significant milestones.
However, there was a recent setback when Foxconn pulled out of a $19.4 billion deal with India’s Vedanta to manufacture semiconductors in the state of Gujarat. This move dealt a blow to India’s goal of bolstering self-sufficiency in the technology supply chain.
In terms of financial performance, Foxconn reported a 1 per cent decline in net profits for the second quarter. Additionally, revenues experienced a 14 per cent year-on-year decrease, reaching NT$1.3 trillion (equivalent to $40.8 billion). This dip in figures serves as an indication of the challenging state of the global electronics market amidst the ongoing economic downturn. Reuters