Apple supplier Foxconn cautious about 2022 earnings outlook


Taipei — Apple supplier Foxconn predicts on Friday that a global chip shortage will plunge into late 2022, reducing fourth-quarter revenue for electronic devices, including smartphones, by more than 15%.

In a telephone conference, Chairman Liu Youngway said Foxconn was cautious about the 2022 earnings outlook because of the coronavirus pandemic, inflation, geopolitical tensions and uncertainty surrounding the supply chain.

Former Foxconn, the world’s largest contract electronics maker, reported a 20% increase in third-quarter profits.

“Without supply shortages, the outlook for the fourth quarter could have been better,” he said, with power management chip supply still tight and the global chip crisis in his previous second quarter. He added that it could last longer than expected.

“As for the outlook for next year, we will be relatively cautious about the outlook,” Liu added.

A year-long shortage of chips due to the surge in smartphones and personal gadgets during a pandemic spilled over into the automotive industry and disrupted production for companies ranging from Apple to GM.

Foxconn previously said the impact of the crisis would be minor, but warned that an increase in COVID-19 infections in Asia could have a negative impact on the supply chain.

Foxconn said it forecasts a decline in revenues for the consumer electronics business, including smartphones, as well as overall revenues for the fourth quarter between 3% and 15% during this period. Analysts predicted a 11% decline, according to Refinitiv’s consensus estimates.

Still, Foxconn said it expects supply shortages in Southeast Asia to ease this month and next month.

The outlook came after a strong third quarter, when sales were up 9% year-on-year, supported by strong demand for smartphones, which remained stable despite supply problems.

Net income jumped to NT $ 36.98 billion ($ 1.33 billion), surpassing Refinitiv’s consensus estimate of NT $ 31.73 billion.

Analysts expect strong iPhone sales to boost Foxconn’s business in the third quarter, with the company securing more than 75% of assembly orders, including the latest iPhone 13. Increased orders at Foxconn.

Apple said last month that supply chain issues caused sales to reach $ 6 billion in the July-September quarter, which will worsen during the New Year holidays.

Foxconn said it hopes the electronic vehicle (EV) business will contribute to revenue in the third quarter of 2022, when it can start production in the United States quickly through a partnership with Lordstown Motors Corp.

Liu said he was considering building more EV partnerships with companies in the Middle East, India and Europe to “serve the local market,” but did not provide details.

Foxconn has been working to become a major EV player in recent months, including announcing a car manufacturing contract with US startup Fisker Inc.

Foxconn’s stake, officially known as Hon Hai Precision Industry Co. Ltd, rose 0.4% in the broader market, compared with 1.4% before the earnings announcement.

($ 1 = 27.8320 Taiwan dollars)

By Yimou Lee and Sarah Wu

Reuters

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