Apple Supplier Foxconn Misses on Profit Estimates as Shift to EV Accelerates

By Avi Ben Ezra Tuesday, March 30, 2021

Foxconn, a Taiwan-based company that is regarded as one of the world’s largest electronics contract manufacturers, reported lower-than-expected profit for Q4.

Foxconn building in Shanghai, China.

Strong Demand for Apple iPhone 12

Apple supplier Foxconn reported a Q4 net profit of T$45.97 billion ($1.61 billion) to miss out on the expected T$50.89 billion ($1.79 billion) from the market analysts. The Q4 figure also represents a 4% decline compared to a year-ago period.

Business revenues soared 15% on the back of the strong demand for consumer electronics and Apple iPhone 12, in particular. This is a better-than-expected business result for the tech company as it previously forecasted its business revenues coming in a range of negative 3% to positive 3%.

Foxconn added that sales of all business units grew in the ongoing Q1 as the tech company witnessed record sales in February. Earlier this month, Morgan Stanley tech analyst Katy Huberty said that the overall demand environment remains positive for Apple products such as the Apple iPhone 12 and iPhone 12 Pro lineup.

Looking forward, the tech company said it projects to see its business revenues growing 10% in 2021 on stronger-than-expected demand for smartphones, including Apple iPhone 12. Furthermore, Foxconn is witnessing strong demand for telecommuting devices it produces for its clients.

The tech company added it is monitoring the global shortages of semiconductors and believes these issues could persist in 2022.

“The impact of shortages in the first two months of the quarter have not been too obvious, because our customers are major companies. Still we are seeing some gradual changes and are monitoring the situation cautiously. Our expectations are that there won’t be a big impact, under 10%,” Young Liu, Chairman of the company, said on a conference call.

The company’s smartphone business unit accounted for 63% of the entire business, with the bulk of revenues in this business segment coming from Apple. The tech company is trying to decrease its dependence on smartphone contracts and Apple, specifically. In this context, Foxconn partnered with electric vehicles (EV) company Fisker to accelerate its efforts to join the EV industry.

Earlier this month, the Taiwanese company announced cooperation with Nidec to strengthen the development of the EV key components for its EV brand, Foxtron.

“Long before Foxtron announced its electric vehicles open platform project in the fourth quarter last year, we had already been discussing cooperating possibility with Nidec, and now with this MoU signed by both parties in place, it seals the partnership and will undoubtedly strengthen, deepen and accelerate the cooperation,” General Manager of Foxtron Andy Lee said, before adding that two companies will present results of this business cooperation in Q4 this year.

As Foxconn continues to diversify its business away from Apple and iPhone smartphones, Morgan Stanley analysts project the tech company may ship over 1 million EV units by 2025 and eventually generate $35 billion in business revenues by that year.

Summary

Apple supplier Foxconn reported a rise in Q4 business revenues by 15%, but its quarterly earnings missed estimates from the surveyed analysts. In the meantime, the company is working to accelerate its entrance into the EV market.

About the Author


Headshot of Avi Ben Ezra

Avi Ben Ezra is the CTO and Co-founder of SnatchBot and SnatchApp (Snatch Group Limited). He leads the Group’s long-term technology vision and is responsible for running all facets of the tech business which includes being the architect of the platforms and UI interfaces.

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