Apple supplier Foxconn forecasts flat sales in 2023 after reporting fourth-quarter profit miss
Apple supplier Foxconn Technology Group, formally known as Hon Hai Precision Industry, on Wednesday offered a cautious outlook for this year after reporting fourth-quarter profit that fell just shy of expectations.
Taiwan-based Foxconn, the world's largest electronics contract manufacturer, offered a forecast of slumping consumer electronics demand this year, offset by an uptick in expected sales of cloud and networking products, personal computers and other components.
The flattish full-year outlook is matched by the current quarter, which the company indicated is expected to be in line with market consensus. It reported net income of NT$40 billion (US$1.3 billion) for the last three months of 2022 on sales totalling NT$1.96 trillion.
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That was down 10 per cent for the same period in 2021 and operating profit also slumped 16 per cent. Analysts had expected slightly higher profit, with a consensus average of NT$40.91 billion ahead of the company's report on Wednesday.
Foxconn dealt with a coronavirus outbreak at its most important mainland Chinese plant in Zhengzhou, capital of central Henan province, during most of the fourth quarter.
The effects of Covid-19 containment measures and worker protests opposing the restrictions cut into the company's ability to produce Apple's most in-demand iPhone Pro models.
Apple and other brands have struggled with tepid consumer spending during a post-pandemic economic downturn, which threatens Foxconn's already thin margins.
Last week's Silicon Valley Bank collapse has fanned fears of systemic financial risk, further clouding the outlook for the global economy.
Beyond Apple's range of smartphones and Mac computers, Foxconn assembles high-end electronics for large and small customers and is vulnerable to slumps in consumer or enterprise demand. Demand for the iPhone has already slipped, with Foxconn reporting February sales were 12 per cent lower this year.
Foxconn is accelerating an expansion into India with a US$700 million plant in the southwestern state of Karnataka in the works. India is one of the few remaining growth markets for smartphones and Prime Minister Narendra Modi has put in place incentives to bring more hi-tech manufacturing within its borders.
Foxconn and other Apple partners, including assembly peers Pegatron Corp and Wistron Corp, have been diversifying away from China amid persistent tensions between Beijing and Washington.
Hon Hai chairman Liu Young-way recently met Modi and committed the company to another manufacturing investment in the southern state of Telangana that is expected to produce 100,000 jobs.
This article originally appeared in the South China Morning Post (SCMP), the most authoritative voice reporting on China and Asia for more than a century. For more SCMP stories, please explore the SCMP app or visit the SCMP's Facebook and Twitter pages. Copyright © 2023 South China Morning Post Publishers Ltd. All rights reserved.
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