For Foxconn’s Sake

Image source: Lelia Lincoln @lelialincoln - Unsplash ub-foto, Hadrian - Shutterstock

What's going on?

Taiwanese electronics giant Foxconn released a pleasantly surprising set of quarterly results on Thursday, while simultaneously flagging a less sunny forecast for future sales.

What does this mean?

Foxconn – the world’s largest manufacturer of electronic equipment for other companies, including iPhones for Apple – saw its earnings grow 30% last quarter compared to the same time last year. Strong demand for smartphones and other consumer gadgets helped profit surge past both the company’s and its investors’ expectations, setting a new second-quarter record.

But Foxconn warned that rapidly rising coronavirus cases in Asia – where most of the firm’s factories are located – are likely to lead to supply chain disruptions. Add in the impact of the ongoing global chip shortage, and the company reckons that revenue from consumer electronics manufacturing will come in slightly lower this quarter than it did the last.

Why should I care?

The bigger picture: If you can’t buy ‘em, make ‘em.
The semiconductor shortage is pushing Foxconn to invest in its own microchip production capability, which the company plans to use to supply its fledgling electric vehicle-building business (tweet this). Foxconn has invested in several Asian chipmakers in recent months, as well as buying a factory from fellow Taiwanese firm Macronix – and the company says its own-brand semiconductor business should generate $2 billion in annual sales by 2025.

Zooming out: Baidu? Google it.
Foxconn wasn’t the only Asian heavyweight reporting results on Thursday. Chinese internet search giant Baidu saw its second-quarter revenue climb 20% from a year earlier – but the company still made a loss after marking down the value of its investment in Kuaishou. Shares of the video-sharing platform sank 28% last quarter after China’s crackdown on its internet industry expanded beyond ecommerce and anticompetitive practices to cover data security and streaming content.

Originally posted as part of the Finimize daily email.

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