Foxconn, the world’s largest contract electronics manufacturer, expects overall revenue to drop in double-digit in the third quarter.
Foxconn’s revenue from the consumer electronics division will dip about 10 percent from a year earlier. Researcher IDC said global smartphone shipments fell 16 percent from a year earlier in the second quarter.
The Taipei-based Foxconn is the largest supplier of iPhones to Apple. The US-based Apple is the third largest smartphone company with shipment of 45.1 million in the second quarter of 2020, said Canalys.
Foxconn could be assembling more than 70 percent of the new iPhones, boosting its revenue growth in the fourth quarter, Taipei-based KGI Securities said.
Foxconn Chairman Liu Young-way told an investor conference in Taipei that it is possible Foxconn’s gross margin could reach 7 percent next year, boosted partly by growth from its component business sector, which includes the production of parts for electronics manufacturing. Its gross margin was 5.91 percent in the second quarter.
The company risks getting caught in the China-U.S. trade war, and Liu said Foxconn was working to build two supply chains, one for China and one for the United States, pointing to the company’s investments in Wisconsin, Mexico, Brazil and Southeast Asia as examples of it diversifying around the world.
“The world factory no longer exists,” he said, adding that currently about 30 percent of the company’s products were made outside China and the ratio could increase “in the future”, although he declined to elaborate.
Foxconn reported a net profit of T$22.9 billion (+34 percent) or $778.54 million for the second quarter ended June.
It said the stronger than expected figures were mainly driven by the server and computing businesses, while revenue from its key consumer products, mainly smartphones, dropped more than 15 percent from a year earlier in the second quarter as the coronavirus pandemic hit global electronics demand.
Foxconn had warned in May of bleak smartphone sales in the second quarter citing an impact on demand due to the virus, but said the work-from-home lifestyles being adopted worldwide would offer new growth opportunities, Reuters reported.