Hon Hai Precision Industry Co. said it expects to multiply its sales of electric vehicle components this year while weathering cooler consumer spending on technology.
The Taiwanese Apple Inc. assembler offered a forecast of slumping consumer electronics demand this year offset by an uptick in sales of cloud and networking products, PCs and especially EV hardware, which it sees growing by as much as fivefold this year. The flattish overall outlook for 2023 is matched by the current quarter.
Hon Hai will build EV battery packs in Ohio and Wisconsin as it expands capacity in the US alongside further international expansion in India, Vietnam, Thailand and Mexico.
The company, also known as Foxconn, reported net income of NT$40 billion ($1.3 billion) for the last three months of 2022, a 10% drop on the same period in the prior year. Operating profit also slumped 16%.
Foxconn dealt with a coronavirus outbreak at its most important plant in China’s Zhengzhou during most of the holiday period. The effects of virus containment measures and worker protests opposing the restrictions cut into its ability to produce Apple’s most in-demand iPhone Pro models.
Apple and other brands have struggled with tepid consumer spending during a post-pandemic economic downturn, which threatens Foxconn’s already thin margins. The SVB fiasco has also fanned fears of systemic financial risk, further clouding the outlook for the global economy.
Beyond Apple’s range of smartphones and Mac computers, Foxconn assembles high-end electronics for large and small customers and is vulnerable to slumps in consumer or enterprise demand. Demand for the iPhone has already slipped, with Foxconn reporting February sales were 12% lower this year.
Foxconn is accelerating an expansion into India with a $700 million plant in Karnataka in the works. India is one of the few remaining growth markets for smartphones and Prime Minister Narendra Modi has put in place incentives to bring more high-tech manufacturing within its borders.
Foxconn and other Apple partners including assembly peers Pegatron Corp. and Wistron Corp. have been diversifying away from China amid persistent tensions between Beijing and Washington. Hon Hai’s Liu recently met Modi and committed the company to another manufacturing investment in the southern state of Telangana that’s expected to produce 100,000 jobs.
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