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Foxconn expects meaningful EV profits from 2023 on US production deal

iPhone assembler sees supply chain shortage worsening in current quarter

A logo of Foxconn at its headquarters in New Taipei City (Photo by Ken Kobayashi)

TAIPEI -- Foxconn, the iPhone assembler now making a big push into building electric vehicles, will not see a significant contribution to revenue and profits from the emerging business until at least 2023, its chairman said on Friday.

The comments from Foxconn Chairman Young Liu came after the Taiwanese company finalized a contract with Fisker to build its first car in the U.S. by 2023. The companies are still mulling four locations including Foxconn's manufacturing complex in Wisconsin.

"Other than the U.S. plant, we will also look for other overseas manufacturing facilities to meet our capacity plans," Liu said in an earnings call after Foxconn posted a big rise in annual revenues. "The first market that we target will be the U.S. and the second will be the Chinese market."

Foxconn is betting on EVs to provide a new area of growth as its core business of assembling consumer electronics becomes more competitive. It has developed a common vehicle hardware and software platform, dubbed the MIH Open Platform, that other companies can use to speed up EV production.

Liu said Foxconn will be making around 150,000 EVs by 2023, and gradually ramp up production to 300,000 to 500,000 EVs, including an eventual goal of 250,000 EVs per year from its partnership with Fisker. 

"According to this plan, we will start to see clear revenue and profit from the EV business from 2023," Liu said. He added that his company will pick further locations for EV production close to big auto markets including China, Europe and India.   

Liu also said the constraints that are plaguing the supply chain for a host of consumer electronics, including a big shortage of semiconductors, were worsening in the April-June period. Liu said he maintained the view that such bottlenecks are likely to be alleviated in the second quarter of next year.   

"The chip and material shortage is more serious in the current quarter," Liu said.

He said many suppliers have demanded that orders be non-cancellable and non-reschedulable -- trying to rule out any overbooking from clients -- but that order momentum remains strong.  

"We think the overbooking situation could be reduced in the second half of 2021, but the shortage will still last till the second quarter of next year," he said. Apple, Google, Facebook, HP, Dell and Cisco are among Foxconn's major clients.

Foxconn's net income of 28.16 billion New Taiwan dollars ($1 billion) for the January-March period rose nearly 13-fold from the same time a year earlier when COIVD-19 disrupted manufacturing activities in China. Revenue rose 45% from a year ago to NT$1.34 trillion.

Liu said his company expected to see a similar level of revenue for the current quarter, which will translate into year-on-year growth of about 19%.

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