Key Apple supplier reports a big hit to revenue in November
Apple Inc (NASDAQ: AAPL) is in focus this morning after its biggest iPhone supplier reported a big hit to revenue in November.
Foxconn revenue tanks 29% in November
Foxconn Technology Co Ltd (TPE: 2354), on Monday, reported a 29% decline on a month-over-month basis. The multinational attributed that hit to:
Production gradually entering off-peak seasonality and a portion of shipments being impacted by the epidemic in Zhengzhou.
Versus November of 2021, the COVID outbreak and related protests resulted in an 11% decline in revenue last month. On the plus side, though, Foxconn said the outbreak was now under control.
The contract electronics manufacturer expects to restore normal production capacity in the coming days. Consequently, financial performance in the current quarter will match estimates, it added. Shares of the Taiwanese firm ended roughly flat on Monday.
What it means for revenue growth at Apple
The stock market news is particularly significant since Foxconn assembles roughly 70% of the iPhones for Apple Inc. Production related challenges at the said mega factory, therefore, could mean trouble for the tech behemoth in the holiday quarter.
Analysts at Evercore ISI now expect Apple Inc to report $122 billion revenue in the December quarter – about $8.0 billion less than their previous estimate. More importantly, that suggests the first year-on-year hit to quarterly revenue since 2019.
Apple had $124 billion in revenue in its holiday quarter of 2021.
CEO Tim Cook is committed to diversifying production away from China but how fast is he able to accomplish that is yet to be known. Apple shares are roughly flat this morning as well.
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