HONG KONG/TAIPEI -- Apple supplier AAC Technologies said Thursday that its quarterly profit fell by more than half from a year earlier as the turmoil continues in global supply chains.
The Hong Kong-listed smartphone acoustic component maker announced that its net profit for July to September is expected to come in between 166 million and 210 million yuan ($25.7 million to $32.6 million), a decline of between 51% and 61% compared with the same period a year ago.
The company stressed that its net profit for the first nine months of the year increased by between 45% and 51% compared with the year before, thanks to robust first-half performance, but the stock market was spooked by the profit warning. The company's share price dropped nearly 15% on Friday from the previous day's close, to HK$31.15, a level not seen in eight years.
The company gave several reasons for the quarterly profit drop, including a substantial fall in foreign exchange gains. Extrapolating from earlier disclosures, AAC recorded an exchange gain of more than 90 million yuan in the third quarter last year, compared with less than 20 million yuan the year before. The company said it expects either a loss or a much smaller gain from foreign currency market fluctuations for the just-ended quarter.
The acoustic parts maker also blamed disruptions in the global supply chain and headwinds in mainland China for the profit drop. On top of the impact of a chip shortage that is plaguing the tech industry as a whole, the company said there was a "material adverse impact" from higher operating costs in China, weaker demand from Chinese customers and the "cancellation of certain phone models."
AAC did not provide further details on the rise in costs, but its profit warning comes as unexpected power cuts are hitting the heavily industrialized Chinese provinces of Jiangsu, Zhejiang and Guangdong. Like many other tech companies, AAC has its key manufacturing sites in Suzhou and Changzhou in Jiangsu, as well as Shenzhen in Guangdong. Local governments are demanding that companies make serious reductions in their power consumption, which suppliers say could threaten production continuity during the busiest season of the year for the tech industry.
AAC did not respond to queries from Nikkei Asia on the causes of its rising costs in China and whether power shortage was a factor.
The cancellation of certain new phones is also affecting key component suppliers other than AAC.
Largan Precision, the world's biggest smartphone camera lens supplier, on Thursday told investors that some of its client's new camera lens design-in projects were postponed from this quarter to early next year due to the continued global chip and component shortages. Largan's customers include Apple, Samsung and Xiaomi, the world's top three smartphone brands.
The Taiwanese camera lens maker said the constrained supply of camera modules in Vietnam is also affecting supply chains. If the delays continue, it said, customer demand "might end up diminishing" if they miss the window for new releases.
Tight supplies of camera modules are already impacting production of the iPhone 13 series, Nikkei Asia previously reported . A significant portion of these components are made in Vietnam, where the southern part of the country has been in lockdown for months.
In addition to industrywide component shortages, companies like AAC are also grappling with rising input costs. Prices of rare earth materials, including a magnetic alloy known as praseodymium neodymium that is essential for making speakers, have surged since last year .