Apple supplier Foxconn sees Q4 revenue slumping on chip supply shortage

By Yimou Lee

TAIPEI (Reuters) – Taiwan’s Foxconn, which assembles iPhones for Apple, said on Friday it expected revenue from its key smartphone business to slide more than 15% in the quarter ending December, hurt by the ongoing global shortage of components.

Speaking during a conference call after the world’s largest contract electronics maker reported a 20% profit jump for July-September, Chairman Liu Young-way said the company was cautious about its 2022 revenue outlook, citing uncertainties surrounding the coronavirus pandemic, inflation, geopolitical tensions and supply chains.

“If not for supply shortages” the company’s fourth-quarter revenue outlook could have been better, he said.

As well as forecasting the slide in revenue in its consumer electronics business, which includes smartphones, Foxconn said it expected overall company fourth-quarter revenue to fall between 3% and 15% in the period. Analysts predicted an 11% drop, according to a Refinitiv consensus estimate.

Foxconn previously said it felt only a small impact from the year-long global chip shortage but had cautioned that rising COVID-19 cases in Asia could hurt its supply chain.

The outlook came after a strong third quarter, in which revenue rose 9% on the year, helped by strong smartphone demand as people continue to work remotely through the coronavirus pandemic.

Net profit jumped to T$36.98 billion ($1.33 billion), beating a Refinitiv consensus estimate of T$31.73 billion.

Analysts had said they expected robust iPhone sales boosted Foxconn’s business in the third quarter, and the company secured more than 75% of assembly orders, including those for the latest iPhone 13. But they cautioned that supply chain problems could mute any further near-term increase in orders at Foxconn.

Apple said last month that supply chain woes cost the company $6 billion in sales during the July-September quarter, and that the impact would worsen during the year-end holiday period.

“In the short term, Hon Hai’s iPhone 13 shipments will continue to be affected by the chipset shortage, something that Tim Cook also confirmed” on an Apple earnings call, Fubon Research wrote in a note dated Nov 8.

($1 = 27.8320 Taiwan dollars)

(Reporting by Yimou Lee and Sarah Wu; Editing by Kenneth Maxwell)

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