Hon Hai Precision Industries, Apple’s main production partner, has cut its revenue growth outlook for 2020 after assessing the potential impact of the deadly coronavirus outbreak, Bloomberg reported. In a text message, Liu Yangwei, the company’s chairman, told Bloomberg that Hon Hai Precision Industry expects sales growth of between 1 and 3 percent this year, below expectations released on January 22 before the outbreak. At the time, the company’s sales growth was between 3% and 5%, below analysts’ average estimate of 5.4%.
Hon Hai Precision Industries makes the vast majority of the world’s iPhones at its factory in Zhengzhou, China. The outbreak could disrupt Apple’s carefully adjusted Chinese production chain, while consumer demand and overall economic growth will be affected to varying degrees. Hon Hai Precision Industries, which is also a major manufacturer of major brands such as Hewlett-Packard and Sony, said on Tuesday it hoped to resume production at factories across China as planned, according to a text message learned by Bloomberg. Suppliers such as Quanta Computer, Inyeda Group and LG Display also said they would resume work in China next week.
Although Chinese officials and companies have set February 10 as a date for most areas to resume work, transportation and other inconveniences remain.
Asked if Hon Hai would cut its initial sales growth forecast for this year, Mr Liu said: “Given the current market sentiment, we cut our forecast to 1-3 per cent.” “
Shares in Hon Hai Precision Industries saw no significant volatility on Wednesday after falling 11 per cent in mid-January, hit by Asian shares.
Apple released a better-than-usual sales forecast in January to reflect what Chief Executive Tim Cook called “uncertainty” caused by the virus in the company’s most important market.
In the future, smartphone sales, especially in China, could be severely affected. The research firm has different estimates of the extent to which shipments have fallen. Strategy Analytics forecasts that China’s smartphone shipments will fall 32 percent in the first quarter, to 60 million units from about 89 million a year earlier. Canalys cut its shipment forecast to 42.5 million units.