Foxconn reportedly received additional orders from Huawei and is expanding production

On July 23, the Securities Times reported that an insider at Foxconn's Shenzhen factory revealed that due to the increase in production of Huawei-related products, it is currently working at full capacity to expand production.

According to the report, data provided by sources showed that the output value of cameras and modules of Foxconn's domestic H-brand customers increased by 94% year-on-year in the first half of this year, and the output of complete machines and components for this customer in May and June increased by more than 15% year-on-year.

It is understood that Flextronics was once one of Huawei's 92 core suppliers and Huawei's largest US supplier, receiving $2.5 billion in orders from Huawei each year, accounting for 10% of its total turnover. However, due to Flextronics following the US ban, it suspended its cooperation with Huawei in May this year and stopped production at its Changsha plant.

Subsequently, Huawei completely removed Flex from its supply chain system, so the Securities Times believes that the H brand mentioned above is Huawei, and Foxconn took over some of the production orders originally belonging to Flex.

It is worth mentioning that BYD, which is also one of the main OEM factories for Huawei mobile phones, will be another direct beneficiary besides Foxconn.

According to Caixin.com, BYD has taken over the Flextronics Phase II project and has started recruiting employees. Industrial and commercial data show that Changsha BYD Electronics Co., Ltd. was registered on June 11, 2019, and its registered address is exactly the location of Flextronics Phase II, No. 9 Tengfei Road, Wangcheng Economic Development Zone, Changsha.

After the United States included Huawei in the "Entity List", Google terminated the GMS certification and authorization of Huawei phones, which had a huge impact on Huawei's overseas mobile phone business. The outside world once believed that Huawei's mobile phone sales this year would be greatly reduced.

However, well-known Apple analyst Ming-Chi Kuo recently pointed out that Huawei's new mobile phone is expected to re-obtain Google's GMS certification and authorization this month (July). After obtaining it, Kuo Ming-Chi believes that Huawei's mobile phone shipments this year are expected to reach 260 million units. According to Huawei founder Ren Zhengfei's recent statement, Huawei's total smartphone shipments this year are expected to reach 270 million units.

Therefore, Foxconn was able to obtain additional orders from Huawei, on the one hand because of the order transfer effect caused by the kickout of Flextronics mentioned above, and on the other hand because Huawei's mobile phone business has recently ushered in a turnaround and sales have begun to increase significantly. According to Reuters, US President Trump agreed to make "timely" authorization for the license approval of sales products to Huawei after discussing with executives of seven Huawei US suppliers.