Apple Supplier Foxconn Signals Revenue Decline in 2022

Chinese workers assemble electronic components at the factory of the technology giant Foxconn in Shenzhen, Guangzhou Province, in 2010. AFP/AFP/Getty Images

Taiwan-based Foxconn, the world’s largest contract manufacturer of electronics and a major Apple supplier, is predicting revenues will potentially dip this year due to continuing supply chain issues.

In a March 15 earnings call, Foxconn Chairman Liu Young-way called 2022 a “very challenging year” but said he was “cautiously positive” about this year’s sales outlook.

The company expects revenues in the first quarter of 2022, and for the full year, to range between a 3 percent decline and a 3 percent increase, and smartphone revenue is expected to remain flat for the year, Reuters reported.

“The pandemic has not eased, inflation is high, and global politics are getting tense—these all further complicate supply and demand and lead to great uncertainty to our outlook,” Liu said in the Reuters report.

He had earlier warned that the ongoing chip shortage could extend into the second half of the year, and he said the company is expected to gain better clarity over the supply chain uncertainty during that time. Liu said Foxconn only sees a limited impact from Russia’s war with Ukraine.

The company had reported better-than-expected profit numbers for Q4 of 2021. At 44.4 billion NT, or New Taiwan Dollars ($1.56 billion), Q4 net profits were over 20 percent higher than in Q3 of 2021. However, net profit was down 3.4 percent when compared to Q4 of 2020. Earnings per share for Q4 of 2021 were 3.20 NT ($0.11), up from 2.67 NT ($0.094) in the previous quarter.

For the full year of 2021, the net profit registered was 139.32 billion NT ($4.89 billion), which is roughly 37 percent higher than 2020’s net profit of 101.8 billion NT ($3.57 billion).

Foxconn had announced the suspension of operations at two of its campuses in Shenzhen on March 13 following a new wave of COVID-19 infections in China. The local government at Shenzhen had issued a new pandemic policy. Two days later, the company declared that some of its operations had been restarted.

Foxconn applied a closed-loop management process at its Shenzhen campuses, the same process that Beijing used during the recently concluded 2022 Olympics. The process can only be implemented in campuses that contain both production facilities and employee housing, Foxconn said in a statement to The Epoch Times.

“In applying this closed-loop management process within the Shenzhen campus and in implementing the required health measures for the employees who live on campus, some operations have been able to restart and some production is being carried out at those campuses. The company will continue to work closely with the relevant authorities in monitoring these operations very closely,” Foxconn said.