Foxconn raises business outlook thanks to smartphones and servers

Taiwan’s Foxconn, the world’s largest contract electronics maker and a key supplier of Apple iPhone, has  raised its full-year business outlook thanks to strong sales of smartphones and servers despite concerns of slowing demand due to rising inflation.
Foxconn manufacturingResearch firm TrendForce said global server market will maintain positive growth in 2022 and server shipments are expected to grow by 5 percent annually thanks to demand from enterprises.

Research firm IDC said shipments of smartphones will decline 3.5 percent to 1.31 billion units in 2022. After three consecutive quarters of decline and increasing challenges in both supply and demand, IDC has significantly reduced its forecast on shipments of smartphones for 2022 from the previous projection of 1.6 percent growth.

Foxconn has grappled with a shortage of chips, which has hurt smartphone production including for its major client Apple, partly due to COVID-19 lockdowns in China, Reuters news report said.

Foxconn said in a statement that June sales rose 31 percent from a year earlier to a record high for the month, thanks to appropriate supply chain management and rising sales of consumer electronics. Smartphones make up the bulk of its revenue.

Earlier, memory chip maker Micron Technology forecast significantly worse-than-expected revenue for the current quarter and said the market had weakened considerably in a very short period of time.

Foxconn said it was optimistic about its business in the third quarter, adding it could see significant growth compared with a year earlier.

Foxconn said the outlook for 2022 has improved compared with earlier expectations for no growth, without providing details.

Foxconn said it has achieved double-digit yearly growth in sales from servers and telecom  products so far this year.

Analysts at Daiwa Capital Markets in Taipei said in a report demand for servers from U.S.-based cloud service providers helped propel double-digit growth for the sector. They expected Foxconn’s operating profit to grow 12-19 percent this year.

Morgan Stanley analysts said Foxconn’s upbeat guidance for the third quarter showed that strong demand for cloud servers and iPhone assembly will continue.