Foxconn is a major supplier for Apple Inc. and thus gives valuable hints on how the technology company is performing. We finally have the 4th quarter profit results of Foxconn, which shows a 10% decrease when compared with last year.
The reason behind such a decrease in profits was the disruptions at one of the company's iPhone factories due to the COVID-19 rules.
The company was also expecting its revenue for the first quarter to be flat, which is in line with what we got. On the other hand, the company's revenue forecast for products classified as 'smart consumer electronics' is expected to grow significantly.
The net profit of Foxconn (a Taiwanese company) for Q4 2022 fell to $1.31 billion or around T$40 billion. During the same period last year, the company earned a profit of T$44.4 billion (a decrease of T$4.4 billion).
According to a poll of 13 analysts, the average profit forecast for Foxconn was somewhere around T$39.98. So on that front, the profit of Foxconn is pretty much in line with the market expectations.
Almost 50% of the company's revenue comes from smartphones such as the iPhone. That's why when the company's plants were shut down due to COVID-19, the revenue also decreased.
Similarly, the global inflation situation and weak global demand also mean that Apple will be ordering fewer iPhones from the Foxconn factory.
Experts believe that production of smartphones is also halted ahead of the New Year as well as other holidays during Q4 2022. And to top it all off, the COVID-19 measures also forced many workers to leave the factory located in China.
For 2023, the profit estimates for Foxconn will be high as the COVID-19 measures are no longer in place. But let's not forget that Apple's product demand could also take a hit due to inflation and interest rates on a global level.