Connect with us
Our website publishes news, press releases, opinion and advertorials on various financial organizations, products and services which are commissioned from various Companies, Organizations, PR agencies, Bloggers etc. These commissioned articles are commercial in nature. This is not to be considered as financial advice and should be considered only for information purposes. It does not reflect the views or opinion of our website and is not to be considered an endorsement or a recommendation. We cannot guarantee the accuracy or applicability of any information provided with respect to your individual or personal circumstances. Please seek Professional advice from a qualified professional before making any financial decisions. We link to various third-party websites, affiliate sales networks, and to our advertising partners websites. When you view or click on certain links available on our articles, our partners may compensate us for displaying the content to you or make a purchase or fill a form. This will not incur any additional charges to you. To make things simpler for you to identity or distinguish advertised or sponsored articles or links, you may consider all articles or links hosted on our site as a commercial article placement. We will not be responsible for any loss you may suffer as a result of any omission or inaccuracy on the website.


Apple supplier Foxconn’s profit slips, warns on ‘materials shortages’

Apple supplier Foxconn's profit slips, warns on 'materials shortages'

By Yimou Lee

TAIPEI -Major Apple Inc supplier Foxconn on Tuesday posted a lower fourth-quarter profit that lagged expectations as the pandemic hit margins, and warned of the impact of “materials shortages” amid tight global chip supplies.

The Taiwanese firm, the world’s largest contract electronics maker booked an October-December net profit of T$45.97 billion ($1.61 billion), a 4% decline from a year earlier, and compared with the T$50.89 billion average of 11 analyst estimates compiled by Refinitiv.

Chief Financial Officer David Huang said the company’s gross margin was hit by the COVID-19 pandemic but strong smartphone sales still contributed to stronger-than-expected performance in the fourth quarter, though he did not elaborate.

Formally called Hon Hai Precision Industry Co Ltd, Foxconn’s fourth-quarter revenue rose 15% on the year.

That was mainly driven by a more than 15% revenue increase on the year from consumer electronics including smartphones, which accounted for 63% of its business in the quarter, Foxconn said.

The company had previously forecast fourth-quarter revenue to be in a range of a decline of 3% and gain of 3% from a year earlier.

Chairman Liu Young-way said he expected first-quarter revenue to be “better than normal” for the season thanks to strong sales of smartphones and telecommuting devices amid a coronavirus-induced work-from-home trend.

Liu, however, said the company is closely monitoring “materials shortages” in the consumer electronics supply chain and that could hit less than 10% of client orders, though described the impact as limited.

“The pandemic and the materials shortage could impact our performance going forward. That’s why we are being cautious,” he said, adding that he expected the shortage to continue until next year.

While Liu did not give specifics on the shortage, industry sources have said a chip shortage that first hit the auto industry is now spreading across the electronics business including smartphones.

Foxconn had previously said it expected revenue to grow about 10% in 2021.

Liu said Foxconn was in talks with “related foundries” on possible collaboration to make chips for electric vehicles (EV), touting the company’s little-noticed strength in speciality chips manufacturing. He gave no details.

The company has in recent months announced plans to become a major player in the global EV market.

Shares of Foxconn have climbed almost 41% this year. They ended up 0.78% on Tuesday, compared with a 0.48% rise in the broader market.

($1 = 28.5280 Taiwan dollars)

(Reporting by Yimou Lee and Ben Blanchard; Editing by Muralikumar Anantharaman, Gerry Doyle and David Evans)

Global Banking and Finance Review Awards Nominations 2022
2023 Awards now open. Click Here to Nominate


Newsletters with Secrets & Analysis. Subscribe Now