Apple supplier Foxconn sees possible revenue hit by supply chain issues

People wear masks to protect themselves from the coronavirus disease (COVID-19) while listening to the annual general meeting at the lobby of Foxconn’s office in Taipei, Taiwan June 23, 2020. REUTERS/Ann Wang

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  • Q4 net profit of T$44.4 billion vs. T$43.32 billion market view
  • Sees 2022 revenue between -3% and +3%
  • Restarted part of production in Shenzhen
  • Said to have supply chain clarification in the second half of the year
  • Expects annual electric vehicle production of up to 750,000 units by 2025

TAIPEI, March 16 (Reuters) – Apple supplier Foxconn forecast a revenue drop of up to 3% for the year in what could be its first annual sales decline in six years, as a shortage of chips squeezes the Smartphone production and demand is cooling following a surge during the pandemic.

The Taiwanese company, which halted production in China earlier this week to comply with government restrictions, said separately that it had restarted some production and operations at its Shenzhen campus after meeting government conditions for that staff live and work in a bubble.

The shutdowns of Foxconn – the world’s largest contract electronics maker – and other companies including Japan’s Toyota Motor (7203.T) have fueled concerns about how global supply chains could be affected as China faces its biggest spike in COVID-19 infections since early 2020. Learn more

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Chairman Liu Young-way said on a post-earnings call Wednesday that Foxconn won’t have better clarity on supply chain uncertainty until the second half.

He said record revenue in 2021, boosted by the explosion in demand for electronics following the pandemic, would lead to “flat” business this year due to a high base year. last.

“The pandemic has not abated, inflation is high and global politics are getting strained – all of this is further complicating supply and demand and leading to great uncertainty about our outlook,” Liu said, qualifying 2022 of a “very difficult year”.

Still, Liu said he was “cautiously positive” about the company’s 2022 sales outlook, citing continued growth in areas such as 5G smartphones and cloud products.

He had previously warned that he expected the chip shortage to extend into the second half of 2022.

Liu said on Wednesday that Foxconn expected limited impact from the war in Ukraine, echoing the Taiwanese government which says any impact on the island’s supply chains would be small because Russia and Ukraine are not not the main sources of import of raw materials such as nickel and neon.

Apple suspended all product sales to Russia in response to the invasion, which Russia calls a special military operation.

Foxconn, officially called Hon Hai Precision Industry Co Ltd, said it expects first-quarter and full-year revenue to be between a 3% decline and a 3% increase. Analysts expected revenue this year to rise 1.2%.

The company expects smartphone revenue to remain stable in 2022.

VE SPEED

Foxconn has announced in recent months its intention to become a major player in the global electric vehicle (EV) market. On Wednesday, he said he doesn’t expect EV revenue to be significant until 2023. read more

Foxconn, which has electric vehicle contracts with various companies including Lordstown Motors Corp (RIDE.O), expects annual production of up to 750,000 units by 2025.

In the fourth quarter ended in December, Foxconn’s revenue fell 6%, its first drop in five quarters, but still the second highest in the quarter.

Revenue from its key smart consumer and electronics business fell 3% to 15% during the period. Smartphones represent 60% of this activity.

Revenues from its cloud and networking products as well as its IT products were flat. Components revenue increased by more than 15%.

Foxconn shares closed 0.5% higher ahead of the earnings release, versus a 0.1% gain in the broader market (.TWII). They have fallen 2.4% so far this year.

Net profit fell 3.4% to T$44.4 billion ($1.55 billion) in the October-December period. This compares to the T$43.32 billion average of 10 analyst estimates compiled by Refinitiv.

($1 = 28.5700 Taiwan dollars)

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Reporting by Yimou Lee and Ben Blanchard; Editing by Sayantani Ghosh and Muralikumar Anantharaman

Our standards: The Thomson Reuters Trust Principles.

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