Apple MacBook Pro supplier Quanta Computer’s profits for the second quarter of 2022 were down 50% and below its average estimate. The loss in revenue is attributed to a long recovery from coronavirus-related disruption as well as extra incentives it had to pay workers due to two riots that occurred at its plants in May.
Quanta’s net income fell 50% in the second quarter of 2022
The Taiwanese manufacturer’s plants in Shangai saw two riots in May 2022. The company was forced to halt production when the resurgence of coronavirus was at its peak. Quanta later got permission to resume production under a “closed-loop” process.
The close loop management system requires the factory workers to live at the facility and undergo regular testing. In addition, Chinese authorities also asked the company to reduce unnecessary interactions between the non-manufacturing staff and factory floors to reduce the chances of the infection spreading.
The reason for the riots was that Quanta did not allow workers to return to their dormitories during breaks. To protest the horrid conditions, hundreds of workers incited two riots back in May.
According to a report from Bloomberg, Quanta’s net income fell significantly due to the COVID-19 shutdowns and a slow restart to halted operations.
MacBook assembler Quanta Computer Inc. said its Shanghai campus recovered from Covid-related disruptions more slowly than expected, halving its profit. Net income for the second quarter came in at NT$3.96 billion ($132 million), down 50% and below the average estimate of NT$4.3 billion
Spokesperson Carol Hsu said the company obtained approval to resume operations in a closed-loop system [in April], but the restart was bumpy due to logistics disruptions and a shortage of workers. The Shanghai unit returned to full production only in late June, she said.
Another expense Quanta had to bear was having to pay extra incentives to its existing workers alongside the capital needed for hiring and training new employees, according to Chief Financial Officer Elton Yang.
Quanta has not publicly revealed the bonuses it paid to workers, but if they caused a hit to its net income, it is likely that the payments were large. The company expects that the disruption to production at its Shanghai plant will continue to impact earnings in the third quarter.