Shortages…
As commentary on shortages in the CE space is getting to be a daily occurrence, we try to pass on those comments that we believe are based in fact and are not intentionally inflammatory, of which there are quite few. It does serve the interests of many CE companies whose cyclicality only give them short periods when they can remain profitable, to ‘promote’ the concept of shortages and its resulting increase in prices. As we have noted above, such component shortages take time to work through the CE supply chain and are lessened in the near-term by components that have been stockpiled by experienced buyers, but eventually those costs take their toll and intermediate or end-user prices rise.
Hon Hai Group (pvt) (aka Foxconn (2317.TT) is not a reliable source in our view, and we could cite many reasons why we have come to this conclusion, but as the largest assembler of Apple (AAPL) products and one of the top global OEMs, what they say does carry weight. Yesterday, during a telephone interview, the chairman of the Hon Hai group stated that he thought the impact of the shortages many not slow down until the 2nd quarter of 2022. While this is certainly a radical view, he also mentioned that the impact of such shortages, particularly semiconductors, was not obvious during the first two months of the year, however changes are gradually appearing. Of course, that was followed with the comment that the impact on Hon Hai group will not be too great.
He went on to indicate that the shortages affect about 10% of normal orders, but the impact on rush or urgent orders is greater, which we assume is due to rapidly increasing component lead times and stockpile reserves allocated to large customers. Again he added that “if there is no impact from the epidemic and a lack of materials this year, the group’s profit margin is expected to have an opportunity to reach 7%,” which is like saying “If we hadn’t hit that iceberg and there were more lifeboats, we would made it to shore...” Sooner or later “Something’s Gotta Give” (Johnny Mercer – 1955).
Hon Hai Group (pvt) (aka Foxconn (2317.TT) is not a reliable source in our view, and we could cite many reasons why we have come to this conclusion, but as the largest assembler of Apple (AAPL) products and one of the top global OEMs, what they say does carry weight. Yesterday, during a telephone interview, the chairman of the Hon Hai group stated that he thought the impact of the shortages many not slow down until the 2nd quarter of 2022. While this is certainly a radical view, he also mentioned that the impact of such shortages, particularly semiconductors, was not obvious during the first two months of the year, however changes are gradually appearing. Of course, that was followed with the comment that the impact on Hon Hai group will not be too great.
He went on to indicate that the shortages affect about 10% of normal orders, but the impact on rush or urgent orders is greater, which we assume is due to rapidly increasing component lead times and stockpile reserves allocated to large customers. Again he added that “if there is no impact from the epidemic and a lack of materials this year, the group’s profit margin is expected to have an opportunity to reach 7%,” which is like saying “If we hadn’t hit that iceberg and there were more lifeboats, we would made it to shore...” Sooner or later “Something’s Gotta Give” (Johnny Mercer – 1955).
RSS Feed