IPhone assembler Pegatron Corp (和碩) yesterday said its net profit increased 1.5 percent annually last quarter as the growth of higher-margin auto product shipments offset the weakness in the consumer electronics segment.
Net profit grew to NT$4.98 billion (US$153.5 million) during the July-to-September quarter, compared with NT$4.83 billion a year earlier. That represented a sequential decline of 19.7 percent from NT$6.21 billion as the company booked massive asset disposal gains during the second quarter.
During the first three quarters, net profit swelled 29 percent year-on-year to NT$14.97 billion from NT$11.61 billion. Earnings per share surged to NT$4.93 from NT$4.02, while gross margin improved to 4.3 percent from 3.6 percent.
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However, revenue shrank 12.7 percent year-on-year to NT$798.35 billion in the first three quarters. More than 60 percent of the company’s revenue came from smartphones and networking devices, it said.
Pegatron expects to return to a growth path next year after riding through a trough this year amid sluggish consumer electronics demand, the company said.
Aside from its core business, Pegatron made inroads into two new businesses in recent years — auto and server businesses. The company expects to ship its first high-end artificial intelligence (AI) servers powered by Nvidia Corp’s advanced GB200 chips in the first quarter of next year, it said.
“Pegatron is a newcomer to the server business, but we have high hopes for our server team,” company president and chief executive officer Gary Cheng (鄭光治) told an investors conference yesterday.
“Our efforts over the past 2 years should bear fruit in 2025,” Cheng said.
Pegatron is shipping servers to enterprises such as the nation’s major semiconductor firms, and second-tier and third-tier cloud service providers (CSPs), Cheng said. The company’s ultimate goal is to supply servers to the world’s four major CSPs — Amazon.com Inc, Microsoft Corp, Meta Platforms Inc and Google, Cheng said.
The company’s progress in expanding its auto business is more pronounced, he said, expecting it to make up a double-digit percentage of its total revenue next year, compared with a mid-single-digit percentage this year, thanks to a diversified customer base and growth in orders, he added.
Pegatron counts Tesla Inc as its major client in the auto business and has invested US$75 million in a Mexico-based subsidiary this year to build up its auto parts capacity.
When asked how to cope with US president-elect Donald Trump’s new trade policy, primarily tariff hikes, Pegatron president and chief executive officer Johnson Teng (鄧國彥) said the company has diversified its manufacturing footprints globally with production sites in Mexico, India and the US. The company is also exploring cooperation with partners to farm out production if needed, Teng said.
Pegatron operates a large facility in Indiana, but the manufacturing costs there are relatively expensive, Teng said.
If the US imposed higher tariffs on goods from Mexico, Pegatron would have the flexibility to ship products from Indiana in response to customers’ requests, he said.
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