Foxconn Technology Group, a major supplier to Apple, Dell, HP and many other major consumer electronics brands, has revised its revenue estimates for the last calendar quarter of 2021 down from the same period last year. The main reason for the decline, the company says, is to be found in the chip crisis and therefore the inability to access a sufficient quantity of components to meet the growth in demand.
A factor that also contributed to Foxconn’s late 2021 drop in revenue is the uneven comparison with an unusually positive end of 2020. Production delays linked to the first phase of the pandemic last year had recorded higher than usual numbers between October and December, when factories had already reopened and started to dispose of the demand from previous periods.
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by Vincenzo Borgomeo
Shrinking semiconductor availability is a problem the industry has been grappling with since January. The problem is also linked in this case to the delays accumulated by the production lines in 2020 due to the pandemic and to the fluctuations in demand, particularly in the automotive market. While sales of new vehicles stalled in the first pandemic phase, the demand for electronic products of all kinds has grown due to the new needs of remote work and education, forcing manufacturers to adapt supply. Towards the end of 2020, with the unexpected and rapid recovery of the automotive sector, the explosion in demand for new cars – gadgets on wheels that use hundreds of electronic components – caused the global congestion of the semiconductor production chain that to date is not resolved yet.
But there is also some good news. Also according to Foxconn, supplies of certain categories of components, such as optical modules for cameras, are already returning to normal and could stabilize before the end of the year. Other products, such as battery management and charging modules, remain difficult to find in large quantities. The crisis as a whole, say the executives of the Taiwanese company, is not about to end anytime soon. The most optimistic estimates in this case speak of a gradual return to pre-pandemic stability not before the second half or the end of 2022.
Meanwhile, even Apple, Foxconn’s largest customer, has made it known that the semiconductor crisis will have a significant impact on the sales numbers of the first fiscal quarter of 2022 (which for Cupertino corresponds to the period October-December of 2021). Component shortages and bottlenecks caused by plant closures for some Covid-19 outbreaks had already impacted the July-September quarter, with lost earnings the company estimated at $ 6 billion.