Hon Hai Precision Industry Co (鴻海精密), a major iPhone assembler, yesterday reported annual growth of 72 percent in net profit last quarter, due to a dramatic decrease in losses from Sharp Corp’s display business.
Net profit surged to NT$22 billion (US$678.7 million) last quarter, from NT$12.83 billion a year earlier, as Hon Hai booked a non-operating loss of NT$4.24 billion, an improvement from NT$20.12 billion in the first quarter of last year. A major portion of its non-operating loss came from Sharp’s large flat-screen business Sakai Display Products Corp.
On a quarterly basis, Hon Hai’s net profit sank 59 percent from NT$53.15 billion.
Photo: Ritchie B. Tongo, EPA-EFE
Its earnings per share expanded to NT$1.59 last quarter from NT$0.93 percent a year earlier — a decline from NT$3.83 in the previous quarter.
Gross margin last quarter rose to 6.32 percent, from 6.04 percent a year earlier and 6.12 percent a quarter earlier, while operating margin improved to 2.78 percent from 2.77 percent in the first quarter of last year and 2.64 percent in the fourth quarter.
“The worst is behind Sharp. Its future only gets better from here,” Hon Hai chairman Young Liu (劉揚偉) said in a statement.
Sharp’s Sakai flat-panel factory, which is of most concern to investors, would be transformed into an artificial intelligence (AI) data center as the Japanese firm aims to become asset light, Liu said.
Hon Hai is the biggest shareholder of Sharp, owning a stake of about 34 percent, together with its investment arm Foxconn (Far East) Ltd.
Going forward, Hon Hai expects revenue this quarter to grow significantly on a quarterly and an annual basis, despite slow seasonality.
The growth would outpace the company’s three-year average, driven by robust demand for AI servers as reflected by an aggressive capital spending increase of 20 percent by the world’s major cloud service providers (CSPs), Hon Hai spokesman James Wu (巫俊毅) told investors yesterday.
Revenue in the second quarter expanded more than 6 percent annually on average from 2021 to last year, Hon Hai’s financial statements showed.
Smart consumer electronics products, mainly smartphones, was the only segment that did not report growth.
“CSP companies show strong server procurement activities with a focus on AI servers. They also started buying general-purpose servers again,” Wu said.
Hon Hai reported a 200 percent annual increase in AI server revenue for the January-to-March period, Wu said.
That growth momentum would continue for the rest of this year, he said, adding that demand for general-purpose servers has also picked up.
The company plans to produce AI servers powered by Nvidia Corp’s new Blackwell graphics processing unit platform in the second half of this year, Wu said.
Regarding the company’s full-year business outlook, visibility has improved from three months ago due to robust AI server demand, Hon Hai said.
However, it retained its forecast that this year’s revenue would increase “significantly” from last year’s NT$6.16 trillion, the second-highest in the company’s history.
Prospects for the information communications technology segment remain flat this year, Wu said.
Hon Hai said it has made progress selling its electric vehicles (EVs) overseas and expects to ship its first batch of its EVs next year.
The company said it also expects to sign supply agreements with two Japanese automakers in the second half of this year, making Japan the most important market for Hon Hai.
Semiconductor shares in China surged yesterday after Reuters reported the US had ordered chipmaking giant Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) to halt shipments of advanced chips to Chinese customers, which investors believe could accelerate Beijing’s self-reliance efforts. TSMC yesterday started to suspend shipments of certain sophisticated chips to some Chinese clients after receiving a letter from the US Department of Commerce imposing export restrictions on those products, Reuters reported on Sunday, citing an unnamed source. The US imposed export restrictions on TSMC’s 7-nanometer or more advanced designs, Reuters reported. Investors figured that would encourage authorities to support China’s industry and bought shares
TECH WAR CONTINUES: The suspension of TSMC AI chips and GPUs would be a heavy blow to China’s chip designers and would affect its competitive edge Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), the world’s biggest contract chipmaker, is reportedly to halt supply of artificial intelligence (AI) chips and graphics processing units (GPUs) made on 7-nanometer or more advanced process technologies from next week in order to comply with US Department of Commerce rules. TSMC has sent e-mails to its Chinese AI customers, informing them about the suspension starting on Monday, Chinese online news outlet Ijiwei.com (愛集微) reported yesterday. The US Department of Commerce has not formally unveiled further semiconductor measures against China yet. “TSMC does not comment on market rumors. TSMC is a law-abiding company and we are
FLEXIBLE: Taiwan can develop its own ground station equipment, and has highly competitive manufacturers and suppliers with diversified production, the MOEA said The Ministry of Economic Affairs (MOEA) yesterday disputed reports that suppliers to US-based Space Exploration Technologies Corp (SpaceX) had been asked to move production out of Taiwan. Reuters had reported on Tuesday last week that Elon Musk-owned SpaceX had asked their manufacturers to produce outside of Taiwan given geopolitical risks and that at least one Taiwanese supplier had been pushed to relocate production to Vietnam. SpaceX’s requests place a renewed focus on the contentious relationship Musk has had with Taiwan, especially after he said last year that Taiwan is an “integral part” of China, sparking sharp criticism from Taiwanese authorities. The ministry said
US President Joe Biden’s administration is racing to complete CHIPS and Science Act agreements with companies such as Intel Corp and Samsung Electronics Co, aiming to shore up one of its signature initiatives before US president-elect Donald Trump enters the White House. The US Department of Commerce has allocated more than 90 percent of the US$39 billion in grants under the act, a landmark law enacted in 2022 designed to rebuild the domestic chip industry. However, the agency has only announced one binding agreement so far. The next two months would prove critical for more than 20 companies still in the process
RSS