The New Taiwan Dollar (TWD) appreciated sharply against the US Dollar on Monday (5th), raising alarms for the export-driven electronics giants. Tech stocks suffered significant losses, with Wistron (3231) dropping 1.9%, Quanta (2382) declining by 1.79%, and Foxconn (2317) falling over 3%, remaining below the seasonal line.

Long-term margin rates for major Taiwanese electronics firms have been 'marginally low' ('marginal profits below 5%'), meaning that the rapid appreciation of the TWD is likely detrimental to profit margins. However, Foxconn and Quanta are expected to reveal their respective views on this issue at the mid-month earnings conference.

Prior to the May earnings conference, both companies have refrained from commenting on the potential impact of the TWD appreciation on their financial reports. Foxconn's margin rate for 2024 is projected to be 6.25%, slightly lower than 6.3% in 2023, while Quanta's is expected to be 7.9%, slightly higher than 7.8% in 2023. The prolonged struggle with low margins continues to pose challenges for stock price improvements, leading management to seek breakthrough strategies.

MediaTek (2454) CEO Cai Lixing noted during an online earnings conference in late April that, based on an assumed exchange rate of 1 USD to 32.5 TWD, the revenue for Q2 is projected to range from 147.2 to 159.4 billion TWD, a decrease of 4% to a growth of 4% compared to Q1, with a year-on-year growth of 16% to 25%. Under these conditions, maintaining a gross profit margin of 47% could be challenging if the average exchange rate is adjusted upward to 31 TWD or even 30 TWD.