Apple iPhone maker Foxconn profits soar to $1bn amid global Covid lockdowns           

Taiwan's Foxconn, which assembles iPhones for Apple, reported first-quarter profit soared past estimates amid the work-from-home boom spurred by the Covid-19 pandemic that has stoked demand for devices like smartphones and laptops.

The world's biggest contract electronics maker also said it sees growth continuing in the second quarter, expecting revenue for consumer electronics and computing products to both rise more than 15% on the year, extending first-quarter sales growth.

Officially known as Hon Hai Precision Industry Co, its net profit rocketed to $1bn (€828m)  in the first three months of the year. A year ago, the company's business was badly hit by the early outbreak of the Covid pandemic. 

Foxconn said sales from its major revenue contributor - consumer electronics including smartphones and wearable devices - climbed more than 15% in the first quarter from a year earlier, while computing products such as laptops also rose more than 15%.

The company had previously expected first-quarter revenue to be "better than normal" for the season thanks to strong sales of smartphones and telecommuting devices.

Foxconn, however, has said it was closely monitoring "materials shortages" in the consumer electronics supply chain, amid a crunch in semiconductor supplies that has hit the car industry, though described the impact as "limited". It assembles iPhones at plants in China and India, the latter now ravaged by the spread of the coronavirus.

Foxconn's shares have risen 14% this year.  

“Component shortages in the second quarter will be more severe than the first quarter,” chairman Young Liu said on a conference call. He reiterated previous comments that shortages may persist until the second quarter of 2022 and that the impact on its businesses won’t exceed 10%.

Taiwan’s Foxconn is among a crop of leading companies from Sony to Stellantis that have sounded the alarm over a growing shortage of key components like semiconductors and display drivers vital to product manufacturing.

To boost its own semiconductor capabilities amid the prolonged shortage, Foxconn agreed earlier this month to set up a joint venture with Yageo to develop chips with average selling prices lower than $2.

“This JV will help Hon Hai’s ongoing business transformation into semi/auto business to increase content value with margin expansion,” BofA analysts wrote, adding the company’s strong sales in the first quarter and April indicate its share gain in Apple Inc. business and the server market.

Sales during the quarter jumped 44%, in line with analyst estimates, the company said last month, helped by robust demand for Apple’s new 5G devices and other gadgets that help consumers stay connected at home during the pandemic. 

Reuters and Bloomberg