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Foxconn has said it wants to reduce its dependence on the smartphone market. More confident for the last six months of 2022, the Taiwanese giant wants to redirect part of its activity towards electric vehicles.
© Getty – In Pictures Ltd. – Corbis
Foxconn is convinced that the second half of the year will be better than the first. It must be said that with the shortage of electronic components that drags on, the rebound of the Covid-19 pandemic in China, the war in Ukraine and inflation that continues to reach peaks throughout the world, the first months of 2022 have been full of obstacles for the production and commercialization of electronic products. In this difficult context, manufacturers and suppliers are trying to adapt to trigger a more positive dynamic.
On the occasion of the annual meeting of shareholders of the company, Liu Young-way, president of Foxconn, thus showed serenity for the near future. “We are quite confident in the stability of our supply chain for the second half of this year”reports Reuters.
Electric cars rather than smartphones in the future?
After indicating that revenues for the current quarter will be impacted by an unfavorable international climate, in particular because of the Russian invasion of Ukraine and the shortage of semiconductors which is impacting iPhone production, the Taiwanese giant said that he wants to reduce his dependence on the smartphone market, even though Apple is his biggest customer.
With this in mind, Foxconn wants to redirect part of its activity towards the electric vehicle market. According to the subcontractor, the sector could weigh 34 billion dollars by 2025. By this time, he hopes to capture around 5% of this flourishing global market. Liu Young-way said his group’s goal is to become the top electric vehicle maker “must see electronic components”.
“A car that costs tens of thousands of dollars can’t be shipped because of a tiny chip worth fifty cents. It was painful for our customers”, did he declare. To remedy this situation, Foxconn wants to increase its ability to manufacture chips for electric vehicles, many of which are small, low-end integrated circuits.
China’s “zero Covid” strategy weakens the production of electronic products
Apple’s main supplier, Foxconn, had a turbulent start to the year, in particular because of the Chinese authorities’ “zero Covid” strategy, with drastic confinements in several major cities of the country which led to the closure of key factories for the electronics industry. The Taiwanese giant was notably forced to suspend its activities in Shenzhen in March. In early May, a spike in Covid-19 cases in Zhengzhou, where a key Foxconn factory is located, also led to a lockdown that could cause slowdowns in the iPhone 14 production line.
Foxconn, however, assures that Beijing’s very strict policy to fight against the resurgence of the pandemic has only a limited impact on its production, insofar as the company has adopted a closed circuit system. This allows it to continue its activity and limit contamination by “keeping” its workers in a bubble in which they live and work. However, the current situation encourages players in the sector to review their copy, and it is no coincidence that Apple, which manufactures more than 90% of its products in China, has informed most of its subcontractors that he intended to strengthen his production outside the Middle Kingdom.