Despite global uncertainty, Apple’s Foxconn predicts a recovery

TAIPEI: Leading iPhone manufacturer Foxconn said that despite the global macro-economic factors affecting businesses worldwide, it will have a better than expected full-year performance as supply chain improves in China which is facing Covid lockdowns.

In a shareholders’ meeting at the company’s headquarters in New Taipei City, Young Liu, chairman of Foxconn, raised the company’s outlook for the current quarter and the full year.

“We previously forecast this year we would maintain a similar level from last year, after factoring in inflation, war (in Ukraine) and other uncertainties, but now we think the full year will be better than our estimate,” Liu told shareholders.

Foxconn reported $16.76 billion in revenue in April, down 4.1 per cent from the previous month.

However, its rivals like iPhone assembler Pegatron and MacBook maker Quanta Computer saw their sales plunging 35 per cent and 40 per cent, respectively.

Foxconn will continue to closely monitor the China Covid lockdowns as the country slowly reopens.

Hit hard by the domestic Covid-19 lockdowns, top Chinese smartphones makers have slashed their orders by nearly 20 per cent for the current quarter (Q2) and the next quarter.

The demand for smartphones and PCs or laptops has dropped ‘like a rock’ and the current global situation and Covid-19 lockdowns can wipe off 200 million units of handsets in 2022, Semiconductor Manufacturing International Corporation (SMIC) in China said earlier last month.

China also suffered a major setback as its semiconductor output shrank 12.1 per cent to 25.9 billion units in April, its lowest since December 2020.

Lockdowns in and around Shanghai began in late March as part of China’s strict zero-Covid policy, and the impact on supply chains continues to linger despite an easing of restrictions.

The China lockdowns are likely to hamper the development of at least one of Apple‘s upcoming flagship iPhones this year which has fallen behind schedule, according to the report.

The Foxconn chairman said the company “plans to mass produce silicon-carbide chips for onboard charging and charging poles next year”.

It will “start making microcontroller chips and Lidar sensor chips to detect range and distance in 2024”.

Apple CEO Tim Cook had said in the company’s latest earnings call that “we have estimated the constraints to be in the range of $4 to $8 billion and these constraints are primarily centred around the Shanghai corridor”.

“The Covid-related disruptions are also having some impact on customer demand in China,” added Apple CFO Luca Maestri.

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