Foxconn cautions on consumer electronics demand as Q4 earnings decline – a blow to Apple
On Wednesday, Foxconn, the world’s largest contract electronics maker and an Apple Inc supplier, reported a 10% decline in net profit for the fourth quarter of 2021 from the previous year, in line with analysts’ estimates. The company also stated that it expects smart consumer electronics demand to decrease slightly this year. This market accounts for more than half of Foxconn’s revenue. However, the Taiwanese company predicts substantial growth in other areas, such as computing, cloud and networking, and component products in 2022. It also anticipates that its revenue for the first quarter and full year will remain flat.
During an earnings call, Foxconn Chairman Liu Young-way commented on the reasons for the expected decline in smart consumer electronics demand. He cited factors such as last year’s high base, inflation, and the slowing global economy. The company’s revenue for its key consumer electronics products division remained flat in the fourth quarter compared to the previous year, according to a statement from the company. Foxconn had experienced disruptions to production at its massive factory in Zhengzhou, China, due to COVID-19-related curbs in November. Thousands of workers had left, causing a delay in production before the Christmas and Lunar New Year holidays.
The net profit for the October-December quarter was T$40 billion ($1.31 billion), compared to T$44.4 billion in the same period the previous year. The company had previously announced that production had returned to normal at the Zhengzhou factory, which produces most of Apple’s premium models, including the iPhone 14 Pro. Apple had reported that its revenue would decline for the second quarter in a row, but iPhone sales are likely to improve as production has resumed in China after COVID-related shutdowns.