Apple supplier Foxconn expects its Covid and unrest-hit Zhengzhou iPhone plant in China to resume full production in the next few weeks.
The world’s largest contract electronics maker said revenue in November fell 11.4% year on year, reflecting production problems related to Covid controls at the factory.
“At present, the overall epidemic situation has been brought under control with November being the most affected period,” the company said, adding it had started to recruit new employees and was gradually “restoring production capacity to normal”.
Foxconn said November revenue for its smart consumer electronics business, which includes smartphones, declined year on year partly due to a portion of shipments being impacted by production disruptions in Zhengzhou. It did not elaborate.
The Zhengzhou plant has been grappling with strict Covid-19 restrictions that have fuelled discontent among workers over conditions at the factory.
Production of the Apple device was disrupted ahead of Christmas and January’s lunar new year holidays, with many workers either having to isolate to combat the spread of the virus or fleeing the plant.
Following the November unrest, that saw workers clash with security personnel, Foxconn could have seen more than 30% of the Zhengzhou site’s November production affected.
Foxconn has not disclosed details of the impact of the disruption on its production plans or finances.
Analysts say Foxconn assembles about 70% of iPhones, and the Zhengzhou plant produces the majority of its premium models, including iPhone 14 Pro.
Foxconn’s Full Production Target
“The capacity is now being gradually resumed” with new staff hiring under way, said the person with direct knowledge of the matter.
“If the recruitment goes smoothly, it could take around three to four weeks to resume full production,” the person said, pointing to a period around late December to early January.
Foxconn and the local government is working hard on the recruitment drive but many uncertainties remain, according to the source. The source cited “fears” some workers might have about working for the company after the plant was hit by protests last month that sometimes turned violent.
“We are firing on all cylinders on the recruitment,” the person said. Foxconn declined to comment.
A second Foxconn source familiar with the matter said the company was hoping to resume full production “as soon as possible” but was not able to give a timeline.
Revenue Outlook Caution
“The situation has stabilised,” the person said, referring to the protests and the government’s easing of Covid restrictions. “The local government is actively helping with the resumption,” the source said.
The Taiwanese company said last month it expects a slight decline in fourth-quarter revenues year-on-year for its smart consumer electronics business and significant growth for cloud and network products.
Foxconn said its overall revenue in the fourth quarter was expected to be “roughly in line with market consensus”, without elaborating. It did not offer a fresh outlook for its various business sectors.
The company said last month that revenue in the final three months of this year would be flattish, and that it had a relatively conservative outlook for 2023.
- Reuters with additional editing by Sean O’Meara