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iPhone Assembler Foxconn Cautions Of Slump In Q4 Revenues Due To Chip Shortage

iPhone Assembler Foxconn Cautions Of Slump In Q4 Revenues Due To Chip Shortage
For the quarter ending December 31, a fall of 15 per cent in its revenue from its key smartphone business is expected by Taiwan's Foxconn, which is the main assembler of iPhones for Apple, the company said on Friday.
The revenue outlook for 2022 needs to be made cautiously, said the company’s Chairman Liu Young-way while speaking during a conference call after a 20 per cent surge in its profit for the July-September quarter was made by the largest contract electronics maker of the world, and added that its cautious outlook was based on uncertainties about the path of the coronavirus pandemic, as well as threats of high inflation, geopolitical tensions and issues impacting the global supply chains.
He added that Foxconn could have made a better outlook for its fourth-quarter revenue "if not for supply shortages".
Foxconn expects its revenues for the fourth quarter to drop between 3 per cent and 15 per cent in addition to the company anticipating a drop in sales for its consumer electronics division, the company said. According to a Refinitiv consensus estimate, analysts projected an 11 per cent loss.
On a previous occasion, Foxconn had stated that there was only a little impact on the company of the year-long worldwide chip shortage but had also warned that its supply chain could be jeopardized because of mounting Covid-19 outbreaks in Asia.
The cautious forecast by the company follows a good performance of the company in the third quarter in which it reported a 9 per cent year on year rise in its revenue because of high demand for smartphones globally by people who continued to work remotely while the coronavirus epidemic still continues.
The company also reported a surge in its quarterly net profit to T$36.98 billion ($1.33 billion), which comfortably beat a Refinitiv consensus estimate of revenues for the quarter at T$31.73 billion.
Strong demand and sales of iPhones helped a surge in Foxconn's revenue in the third quarter, according to analysts, as the company notched up more than 75 per cent of assembly orders, which included a higher order for iPhone 13. But the further near-term increase in orders at Foxconn could be suppressed because of the issues with the global supply chain, the company cautioned.
In a statement last month, iPhone maker Apple said that it took a hit of $6 billion in sales during the July-September quarter because of issues being faced by its supply chains, and had warned that the effect of the issue would be more severe during the holiday period at the end of this year
"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

Christopher J. Mitchell

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