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Hon Hai (Foxconn) Impacted by IC Shortages
The chairman of the Hon Hai group sent mixed signals when he said the impact of the shortages could slow down production starting in the 2nd quarter of 2021. He also mentioned that the impact of such shortages, particularly semiconductors, was not obvious during the first two months of the year, however changes are gradually appearing. He went on to indicate that the shortages affect about 10% of normal orders, but the impact on rush or urgent orders is greater, which is likely due to rapidly increasing component lead times and stockpile reserves allocated to large customers. He added that “if there is no impact from the epidemic and a lack of materials this year, the group’s profit margin … is expected to reach 7%.”
Then, Foxconn posted earnings on Tuesday that missed analysts’ expectations – and warned that ongoing microchip shortages could hurt its future orders.
Strong demand for Foxconn-built iPhones and home-working equipment drove last quarter’s revenue higher, but international currency swings ate into the company’s profit. As the value of the Taiwanese dollar increased relative to the American, Foxconn’s local costs increased, while the worth of its overseas sales was eroded.
The company warned that the global shortage of microchips could potentially leave it unable to fulfil up to 10% of its orders this year. Semiconductor shortages were previously thought to hit carmakers hardest: they reportedly pay less for chips than technology companies and are therefore last in line. But as the world’s largest electronics assembler, Foxconn should know when tech firms are also set to miss out. The current short supply of semiconductor fab capacity is not normal, as the overall capacity should be more than enough to satisfy all demand in normal times, according TSMC chairman Mark Liu, who describes as "economically unrealistic" attempts by the US and Europe to expand their own fab capacity to satisfy all of their needs. But the short supply has been sending foundry quotes rising, with UMC and PSMC set to adjust upward their quotes by 10-20% starting April for rush orders. The electric vehicle (EV) industry has seen fast development with rosy long-term outlook, thanks to government policy support, according to industry experts speaking at a forum on future cars held in Taipei.
Source: Finimize
The chairman of the Hon Hai group sent mixed signals when he said the impact of the shortages could slow down production starting in the 2nd quarter of 2021. He also mentioned that the impact of such shortages, particularly semiconductors, was not obvious during the first two months of the year, however changes are gradually appearing. He went on to indicate that the shortages affect about 10% of normal orders, but the impact on rush or urgent orders is greater, which is likely due to rapidly increasing component lead times and stockpile reserves allocated to large customers. He added that “if there is no impact from the epidemic and a lack of materials this year, the group’s profit margin … is expected to reach 7%.”
Then, Foxconn posted earnings on Tuesday that missed analysts’ expectations – and warned that ongoing microchip shortages could hurt its future orders.
Strong demand for Foxconn-built iPhones and home-working equipment drove last quarter’s revenue higher, but international currency swings ate into the company’s profit. As the value of the Taiwanese dollar increased relative to the American, Foxconn’s local costs increased, while the worth of its overseas sales was eroded.
The company warned that the global shortage of microchips could potentially leave it unable to fulfil up to 10% of its orders this year. Semiconductor shortages were previously thought to hit carmakers hardest: they reportedly pay less for chips than technology companies and are therefore last in line. But as the world’s largest electronics assembler, Foxconn should know when tech firms are also set to miss out. The current short supply of semiconductor fab capacity is not normal, as the overall capacity should be more than enough to satisfy all demand in normal times, according TSMC chairman Mark Liu, who describes as "economically unrealistic" attempts by the US and Europe to expand their own fab capacity to satisfy all of their needs. But the short supply has been sending foundry quotes rising, with UMC and PSMC set to adjust upward their quotes by 10-20% starting April for rush orders. The electric vehicle (EV) industry has seen fast development with rosy long-term outlook, thanks to government policy support, according to industry experts speaking at a forum on future cars held in Taipei.
Source: Finimize
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