Apple supplier Foxconn sees possible annual sales dip on supply chain woes

[TAIPEI] Apple supplier Foxconn forecast an up to 3 per cent fall in revenue for the year in what could be its first annual sales decline in 6 years, as a shortage of chips squeezes smartphone production and demand cools following a surge during the pandemic.

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

The stoppages from Foxconn - the world's largest contract electronics maker - and other companies including Japan's Toyota Motor have fuelled concerns over how global supply chains could be impacted as China deals with its biggest spike in Covid-19 infections since early 2020.

Chairman Liu Young-way said on a post-earnings call on Wednesday (Mar 16) that Foxconn would only have better clarity on supply chain uncertainty in the second half of the year, but added that he was "cautiously positive" about the company's 2022 sales outlook.

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

Foxconn, formally called Hon Hai Precision Industry, said it expected revenue for the first quarter as well as the year to range between a 3 per cent fall and a 3 per cent rise. Analysts expected revenue this year to rise 1.2 per cent.

The company forecast smartphone revenue to be flat in 2022.

Foxconn has in recent months announced plans to become a major player in the global electric vehicle (EV) market. On Wednesday, it said it doesn't expect revenue from EVs to be significant until 2023.

In the fourth quarter ended December, Foxconn's revenue fell 6 per cent, its first decline in 5 quarters.

Revenue from its key smart consumer and electronics products business fell between 3 per cent to 15 per cent, in the period. Smartphones account for 60 per cent of this business.

Revenue from its cloud and networking products as well as computing products was flat. Components revenue rose more than 15 per cent.

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

Net profit fell 3.4 per cent to NT$44.4 billion (S$2.1 billion) in the October-December period. That compared with the NT$43.32 billion average of 10 analyst estimates compiled by Refinitiv. REUTERS