One of the biggest iPhone suppliers, Foxconn, said on Friday that it expects the ongoing chip shortage to continue into the second half of 2022 making it difficult for tech giants to keep up with consumer demand, according to a new report. In addition, the manufacturer expects revenue from its smartphone business to slide more than 15% in the quarter ending December affected by the global chip crisis.
Ongoing chip shortage to impact Foxconn’s revenue
Apple has been dealing with the chip shortage for the last few quarters but it has only recently started affecting its business significantly. The shortage of specific components and constraints in production have impacted the manufacturing process of iPhones, iPads, Apple Watches, and Macs. In this past quarter, the shortages cost the tech giant $6 billion in revenue and the impact is expected to be more severe in the next quarter.
“Given the on-and-off COVID situation globally, we expect the component shortage will extend to at least the second half of next year, which is longer than our previous estimate of till the first half of 2022,” Foxconn Chairman Young Liu told investors on Friday.
“Our revenue performance for this year was better than our previous expectation, which will be a higher comparison base for next year. We will be rather cautious about the next year’s outlook,” Liu said. “COVID and inflation are two very major factors to influence [the global economy], and it’s still hard to predict.”
While some reports suggest that production is improving or that the ongoing chip shortage is not touching Apple, the industry is still a ways away from normalcy. As the busy holiday season approaches, Apple is urging customers to place their orders as early as possible to make sure they receive them just in time. The tech giant also provided “order by” dates for some of its most popular products to help customers in the ordering process.