Foxconn announces lower sales after protests at iPhone factory in China halt
Hon Hai Precision Industry Co. said its sales for November were down 11.4% from a year earlier after some shipments were affected by a Covid outbreak in the Chinese city of Zhengzhou, where the company operates the largest iPhone assembly complex in the world. The company, also known as Foxconn, said November was the worst-hit period for the pandemic and expects the fourth quarter to be “roughly in line with market consensus.” The Covid outbreak has led to government shutdowns, an exodus of workers and violent protests at the manufacturing plant.
The Zhengzhou campus in central China is where the bulk of the world’s iPhone Pro handsets are assembled, making it critical to Apple Inc.’s ability to meet next-generation demand . Apple has said it expects shipments to be delayed this year due to disruptions, and analysts have offered a series of increasingly pessimistic forecasts for the shortfall in shipments this year. UBS said this month that the entire iPhone 14 generation could be 16 million units lower than previous expectations.
Shares of Hon Hai slid as much as 2.4% in Taiwan on Tuesday, the biggest intraday decline since October, while Apple’s stock fell less than 1% in the United States.
Foxconn assured that the situation had been “under control” and that its production would improve throughout the year.
“In addition to reallocating production capacity from different factories, we have also started recruiting new employees and are gradually moving towards restoring production capacity to normal,” Foxconn said in the statement.
China is rolling back Covid restrictions in some cities including Zhengzhou, where authorities on Sunday announced an immediate end to mandatory Covid testing to enter buses, subways, taxis and other public places in addition to those who leave from the city or go to karaoke bars and internet cafes. Foxconn is continuing closed-loop operations, limiting workers’ movements to their dormitories and at the factory, according to a notice posted on WeChat.
“China’s easing of the Covid-Zero policy could help boost Hon Hai’s sales in December, paving the way for it to meet or even exceed Q4 forecasts,” Bloomberg Intelligence analysts Steven said on Monday. Tseng and Sean Chen in a note.
© 2022 Bloomberg L.P.
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