Foxconn’s major production base in central China, with around 200,000 employees, is currently not operating.
iPhone assembler and Apple (NASDAQ: AAPL) supplier Foxconn is expecting to see flat revenue growth in Q4. This came after it reported earnings that missed analysts’ estimates in the third quarter. At writing, the technology company is up 0.30% to $135.27 at extended trading hours. Apple has yet to record any gains in its shares for the past year. Foxconn is the biggest maker of the Apple iPhone and accounts for around 70% of the phone’s shipments globally. Aside from central China, the company has other production sites in South China and India.
Following the missed Q3 earnings announcement, Apple said to expect flattish revenue in Q4 due to China’s Covid turmoil. There is a persisting spread of the coronavirus in China, and authorities have moved to shut down specific locations to curb the situation. The country reported 3,683 cases, its highest daily tally of infections in six months.
Unfortunately, Foxconn’s major production base in central China, with around 200,000 employees, is currently not operating. And many workers have fled the site. As a result, reports show that iPhone production at the Zhengzhou factor may drop by 30% this month. Apple informed customers that there would be a delay in the shipments of the high-end models of the iPhone 14 than previously anticipated.
The lower shipment and order delay has dampened the phone maker’s outlook for the current quarter. As a result, Foxconn has lowered its expectations for Q4. Traditionally, Q4 is the bubbling season for Foxconn and other tech companies. There is usually high demand for cell phones, tablets, and other electronics for the year-end holiday. While many gifts themselves and loved ones during the season, others buy new gadgets for work use in the busy period.
During the third quarter, the electronics maker said its net profit increased 5% to T$36.98 billion YoY. According to Refinitiv, 11 analysts expected an average profit of T$41.3 billion.
Despite the challenges at the Zhengzhou plant, Foxconn said it is making efforts to resume full production at the plant as soon as possible, which will contribute to Q4 financial performance. Shortly after, it noted that production would continue at the factory under a “closed loop” system. This means that staff will live and work on the site and isolate themselves from the rest of the world.
The lockdowns in China affect the whole world as many top manufacturers are located there. As a matter of fact, many companies are still counting their losses. Many expect Apple’s shares will suffer from the delay in iPhone 14 shipments.
Ibukun is a crypto/finance writer interested in passing relevant information, using non-complex words to reach all kinds of audience.
Apart from writing, she likes to see movies, cook, and explore restaurants in the city of Lagos, where she resides.
