Apple supplier Foxconn steps up investment outside China

March 16, 2023 7:40 am

[Source: Reuters Business]

Apple Inc supplier Foxconn (2317.TW) said it plans to ramp up investment outside of China and efforts to attract automakers to its contract manufacturing business, as the company reported weaker demand for consumer electronics.

Foxconn, which assembles around 70% of iPhones, has been diversifying production away from China, whose strict COVID restrictions disrupted its biggest iPhone plant last year. The company also seeks to avoid a potential hit to its business from mounting trade tensions between Beijing and Washington.

He said expansion was needed in countries such as the U.S., Vietnam, India, Mexico and China, “in response to customer and supply chain adjustments”.

Article continues after advertisement

Liu said currently about 70% of the company’s revenue is derived from products made in China, but “going forward the proportion of overseas region will continue to increase.”

Foxconn did not say how much its investment would increase by this year.

The world’s largest contract electronics maker expected revenue for the first quarter and full year to be flat, as weak demand for consumer electronics would be offset by significant growth in computing, cloud, networking and component products.

More than half of Foxconn’s revenue comes from consumer electronics.

Foxconn grabbed headlines in November when curbs to control COVID-19 prompted thousands of workers to leave its massive factory in China’s Zhengzhou city, disrupting production ahead of Christmas and January’s Lunar New Year holidays.

Foxconn, which wants to replicate with electric vehicles the success it has had with the iPhone, said it was both approaching and being approached by many automakers.

Foxconn, formally called Hon Hai Precision Industry Co Ltd, has acquired the former General Motor Co (GM.N) plant in Lordstown, Ohio and has also hired a former Nissan (7201.T) executive, Jun Seki, to lead its efforts in EV business expansion.

Liu said revenue from EV components is expected to rise sharply to between T$50 billion and T$100 billion this year from T$20 billion last year. In Ohio, Foxconn will focus on battery packs for EVs, while Wisconsin will produce energy storage system (ESS) battery cells and battery packs, he said.

The company has also been expanding production of EV components in Mexico.

Net profit for the October-December quarter fell 10% to T$40 billion ($1.3 billion) from a year earlier, the company said, in line with analysts estimate.

The company said previously that production has returned to normal in Zhengzhou, which produces the majority of Apple’s (AAPL.O) premium models, including the iPhone 14 Pro.

Apple last month forecast its revenue would fall for a second quarter in a row, but that iPhone sales were likely to improve as production had returned to normal in China after the COVID-related shutdowns.