Hon Hai Precision Industry Co.’s profit plunged by the most on record after the coronavirus disrupted its China production and a low global smartphone demand.
Apple’s manufacturing partner recorded a 89% decline in net income to NT$2.1 billion ($70 million) in the first three months of 2020.
Global shipments of smartphones fell at their fastest rate on record in the first quarter, hitting the assembler’s sales even though its main production facilities managed to return to full seasonal staffing levels around mid-March.
On Friday, Hon Hai said it incurred costs related to the pandemic of NT$10 billion, though some of that will be compensated by the Chinese government. The company expects its revenue to recover to double-digit sequential growth this quarter. However, it still warned smartphone demand remains uncertain.
Production at many of Apple’s Asian partners ground to a halt after efforts to curb the spread of Covid-19 kicked in. That resulted in severe shipping delays for devices and led to component supply bottlenecks. Apple shuttered all 42 retail outlets in China, a critical market for the company, followed by store closures in other countries.
Covid-19 has also delayed product development and launches. Apple’s four upcoming redesigned iPhones with 5G will come out several weeks later than usual, although it they are but still within the fall window, according to reports.