Foxconn Warns of Slowed Growth Amid Rising Inflation, COVID Lockdowns

Foxconn Warns of Slowed Growth Amid Rising Inflation, COVID Lockdowns

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Foxconn has warned investors that it could see a decline in expected revenue for the current quarter as growth slows amid rising inflation and supply chain issues caused by China's COVID lockdowns.

Reuters reports that while the company's closed-loop system has limited the direct impact of China's COVID lockdowns, it has grappled with a severe shortage of chips, affecting production.

"There are many uncertainties in the market at the moment," Foxconn Chairman Liu Young-way told a post-earnings call, citing the pandemic, geopolitical risks and inflation among them for the year. "They are presenting quite some challenges to demand and supply."

Liu says inflation has been hitting demand for lower-end consumer electronics but has yet to seriously affect higher-end devices.

"We are closely watching when inflation will impact mid and high end products," he said.

Foxconn expects overall revenue to be flat for the quarter and for the full year. Notably, the company just closed a deal with Lordstown Motors to buy its factory for $230 million. The two companies are entering into a joint venture to make vehicles with Lordstown owning a 45% stake in the new business.

Liu said that similar to its smartphone assembly business, gross profit margins for assembling EVs are relatively low. Thus, the company plans to develop more profitable components such as auto chips and batteries.

It's believed that Foxconn's entry into the EV market will help it gain the experience necessary to land orders for the much rumored Apple Car.

More details in the full report linked below...

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Foxconn Warns of Slowed Growth Amid Rising Inflation, COVID Lockdowns
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