Foxconn seeks growth outside China, predicts ‘flat’ 2023

Expect a flat year, but international plans remain

Like many in the Apple supply chain, iPhone manufacturing partner Foxconn has confirmed it wants to diversify manufacturing outside China.

Hit record high but be down about it

The world’s largest contract electronics maker, Foxconn Chairman Young Liu was speaking during its Q4 earnings announcement, during which it confirmed a fall in 2022 profits, down 10% over 2021.

That sounds worse than it actually is. Earnings per share reached a 15-year high while net profit totalled NT$141.5b and the company declared a record cash dividend of NT$5.30 per share, a record high since the company’s listing in 1991.

For the full year 2022, revenue reached an annual record of NT$6.627 trillion, up 11% from a year earlier; gross profit at NT$400.1 billion, rose 10% on-year; operating net profit at NT$173.8 billion, increased 17% on-year; and net profit at NT$141.5 billion, gained 2% on-year.

Liu said that while 70% of its revenue is currently generated in China the proportion of revenue it generates outside that country will continue to grow.

On labour relations

“It is a basic truth that labor-intensive industries transfer to low GDP countries,” he said. He also urged high GDP nations to upgrade their industries to support sustainable development of their high GDP societies. This follows news earlier this month thjat Apple and Foxconn have managed to convince India to change labour laws so iPhones get made faster.

Looking ahead, Liu warned that overall revenues for Q1 and the full year should be flat.

“We maintain a relatively conservative view towards the smart consumer electronics and think they might decline slightly,” he said.

This could be considered in line with Apple’s expectations across the comping year. Apple CFO Luca Maestri has predicred double-digit declines for Mac and iPad sales in the March quarter compared to last year.

International plans remain

Foxconn continues to expand manufacturing, recently announcing a $700 million investment in an iPhone factory in India and another $300 million on production in Vietnam.

The company also recently announced a 1MW investment in solar power in Wisconsin. Foxconn recently attracted attention when workers at its biggest iPhone manufacturing center in Zhengzhou, China, rebelled during strict Covid lockdowns.

Apple slows (some) things down

In related news, Apple is reported to be freezing hiring, reducing, and delaying bonus payments and choosing not to replace employees who quit the company in an attempt to “streamline operations during uncertain times,” a report claims.

This is a continuation of an approach the company began last July as recession fears emerged. At that time, CEO Tim Cook called Apple’s approach, “prudent and thoughtful,” saying the company has now become “very deliberate when it comes to hiring.”

However, while other tech firms shed jobs at a rapid clip, Apple’s approach so far has been to become more disciplined in recruitment and for Cook to take a multimillion dollar pay cut. These measures may yet be enough, as the company is fairy disciplined in its approach to recruitment and did not take on as many new hires during the covid years as others in the industry.

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