iPhone Maker: Hon Hai Analysis
The majority of the world’s iPhones are made by Hon Hai Precision Industry Co. (TPE:2317), which reported a profit that exceeded expectations as demand for its cloud products helped it overcome supply-chain bottlenecks and weak smartphone demand.
In contrast to the median estimate of NT$30.8 billion, Apple Inc.’s largest assembly partner announced net profitability of NT$33.3 billion ($1.1 billion) for the quarter ending in June. NT$1.5 trillion in revenue was reported before by Hon Hai.
Hon Hai has had to deal with component shortages, weak spots in the economy, and logistical difficulties caused by Covid in China. In response, the business, which also manufactures Sony PlayStations and Dell desktop computers, has leveraged its size to bargain with clients and vendors.
Despite the effects of the pandemic, Apple (NASDAQ:AAPL) reported good quarterly results, primarily from the iPhone. Investors worried about a slowdown were soothed, but there are still alarming signals, including sales decreases for Apple’s Mac, iPad, and wearables business from a year ago.
The Taiwanese company has been increasing its revenue from corporate clients in anticipation of a possible decline in consumer demand for electronics, like iPhones. In July, it reported robust cloud and network computing solutions sales.
According to Bloomberg Intelligence:
Due to the strong demand for the transition to cloud computing, the company’s server goods may expand quickly. When entry-level demand suddenly declines, and supply chains are impacted by lockdowns in China, its exposure to high-end IT products and operational resilience could increase its market share.
Hon Hai is likewise attempting to grow its electric vehicle business. Aiming for a 5% market share in EVs by 2025, the largest contract manufacturer in the world purchased the Ohio-based factory that produces electric pickup trucks from Lordstown Motors Corp (NASDAQ:RIDE). The two partners will reveal a new vehicle idea in the fourth quarter according to Lordstown’s announcement last week.
Featured Image: Megapixl @Jetcityimage
