Foxconn is concerned about the impact that China’s ongoing COVID-19 outbreaks will have on its revenue, a new report has revealed. The manufacturer is specifically concerned about how its earnings will fare in the ongoing quarter with the holiday season in mind.
The lockdown of Foxconn’s Zhengzhou facility to have a significant impact on its revenue
A few weeks ago, Apple’s main iPhone assembler, Foxconn, was forced to work under closed-loop production protocols due to a COVID-19 outbreak in Zhengzhou. Foxconn tried numerous things to minimize the impact of the outbreak such as raising the daily bonus for employees to 400 yuan ($55) a day, up from 100 yuan ($13.77) as an incentive. However, soon after the initial outbreak, its plant was placed under a week-long lockdown.
The situation got so out of hand that Apple announced that it would be scaling back production of the iPhone 14 lineup at Foxconn’s facility in the region. Wedbush and Morgan Stanley analysts then said that the outbreak will have a minimal impact on Apple’s earnings since the production issues will be resolved once lockdowns will be lifted.
Just yesterday, a new report from the Wall Street Journal claimed that the COVID-19 outbreak in China has spread to all 31 provinces in the region and is having a bigger impact on production than previously predicted.
That brings us to today, Bloomberg today revealed that Foxconn is concerned about the revenue of consumer electronics this quarter since its main production facility has been walled off in central China
The company, known also as Foxconn, reported earnings that missed estimates for the third quarter and said revenue growth will be flat for the current three-month period. Hon Hai is now trying to resume full production after a coronavirus flareup in October triggered a lockdown last week around its biggest factory in Zhengzhou, severely curtailing the flow of goods and people it needs to sustain iPhone assembly.
Foxconn manufactures almost 80% of all global iPhone shipments at its Zhengzhou facility so it makes sense that the company is concerned about its earnings. Adding on to this, Apple is reportedly in talks with other suppliers, Pegatron and Luxshare ICT, to ask them to switch production lines of the iPhone 14 and iPhone 14 Plus to the iPhone 14 Pro and Pro Max.