Foxconn: Chip shortage will have 'limited impact' on Apple

Apple will not be severely affected by the major chip shortage that has crippled the tech industry since the start of the COVID pandemic.

That's according to Foxconn chairman Liu Young-Way, who told reporters that the severe lack of semiconductors will have a “limited impact” on the company’s largest customer – Apple.

This is because Foxconn's major customers, which also includes Cisco, Dell, Huawei, and Microsoft, have “proper precautionary planning” in place, according to the company.

“Therefore, the impact on these large customers is there, but limited,” said Liu.

He added that Foxconn, formally known as Hon Hai Precision Industry Co Ltd, is expected to perform well in Q1 and Q2 of 2021, “especially as the pandemic is easing and demand is still being sustained”.

Liu's comments come months after Apple admitted that it was struggling to source chips that manage power consumption in a number of its devices, including the iPhone, due to an increase in demand for silicon as well as supply-chain issues related to the spread of coronavirus.

While Apple is set to remain largely unaffected going forward, the shortage of semiconductors had a severe impact on major tech giants’ financial performances in the last year. One of them was HPE, which in March 2020 reported an 8% decline in its year-on-year revenues, largely due to a continued shortage of Intel processors. This caused the company’s net revenues to fall from $7.5 billion for the first quarter of 2019 to $6.9 billion for the same period in 2020, much lower than analyst estimates.

A year later, the shortage is still going strong, forcing Nvidia to turn to some of its older graphics cards in order to meet the rising demand for GPUs. The company is r-releasing its legacy GTX 1050 Ti chip, which was technically phased out two years ago, along with the GeForce RTX 2060, which was replaced earlier this year.

Other tech manufacturers have also reported difficulties: Sony reportedly said that the shortage will affect supplies of its new consoles, while Lenovo announced it would manage the supply crunch with its size and buying power.

The chip crisis has also been felt in the automotive industry, which has prompted the Biden administration to pledge that it is exploring ways to address the global semiconductor shortage.

Geoff Blaber, CEO at CCS Insight, told IT Pro that Foxconn’s statement reflects the fact that, for the most part, the smartphone industry has carefully managed its supply chain throughout the last 12 months.

"In contrast to an automotive sector which faced far more significant pressure due to demand contraction and a ‘just in time’ manufacturing process, the smartphone industry hasn’t made the same major adjustments to supply requirements which then need rectifying at short notice as demand recovers," he said.