The world’s biggest microchip maker has said demand for mobile phones and computers has dropped “like a rock” as war in Ukraine and Covid lockdowns in China take their toll on consumer demand for electronics.
The boss of Semiconductor Manufacturing International Co. (SMIC) told investors: “There are at least 200 million units of smartphones that will disappear suddenly this year and the majority of them are from our domestic Chinese phone makers.
“We cannot yet see an end to the downtrends in these segments.”
The downbeat comments came even as SMIC reported record sales and earnings in the first quarter of 2022.
Revenue went up 16.6% to reach $1.8 billion (£1.5 billion), while gross profits increased 35.7% to $750 million (£614 million).
However, the company warned its profit margin would drop by as much as 3% in the next quarter as a result of lower production at some of its Chinese facilities.
In a call with investors, Foxconn chairman Liu Young-way warned that inflation was already hitting demand for cheaper consumer electronics, adding: “We are closely watching when inflation will impact mid and high end products.”
The company had to temporarily shut two of its factories in March following a coronavirus lockdown in the city of Shenzhen. It warned of a shortfall in production as iPhone making facilities were temporarily relocated. Problems were exacerbated by a shortage of chips needed for smartphone production.
Yesterday, Apple lost its position as the world’s most valuable company as its market value dropped behind that of oil giant Saudi Aramco. Apple shares are down 20% since the start of the year.