18 May 2020 -

Is worst of Covid behind electronics manufacturing sector?

Foxconn says production will return to normal, reports the Financial Times (FT).

“Technology industry bellwether says worst of crisis could be behind it, says the FT here. “The company, closely watched as an indicator for global technology demand due to its dominant position in assembling gadgets and manufacturing components, said the worst was over in terms of Covid-19’s impact on its operations.”

They report, “Net earnings in the first three months of 2020 fell by 89 per cent compared with the same period last year to NT$2.1bn ($70.2m), the group’s Taiwan-listed flagship Hon Hai Precision said on Friday.”

“Things were not normal in February and early March,” Liu Young-way, chairman, said on a call with investors in reference to the impact from the health crisis. He added that the need to pay wages to the group’s mostly China-based labour force while all production was halted for several weeks had cost about NT$10bn, lowering Foxconn’s gross margin by 1 percentage point to 4.5 per cent. “But in the second quarter, this will return to normal,” Mr Liu added.

The FT suggests their declining revenue in the smartphone sector will be somewhat offset by their computer sector. They report, “Foxconn forecast that revenue in its computing segment would jump by 15 per cent in the three months to June compared with the same period last year. Revenue from enterprise products and electronic components could increase by about 10 per cent. But revenue in the smartphone segment, which accounts for the lion’s share of the group’s business, would probably drop by another 15 per cent”.

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