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Resumption Of Work At Apple Supplier Foxconn Factories In China Beats Expectations

Terry Gou Tai-ming, founder of Apple’s major contract manufacturing partner Foxconn Technology Group, said on Thursday the resumption of production at its factories in mainland China had “exceeded expectations”, following a prolonged halt owing to the coronavirus outbreak that has disrupted supply chains.

Foxconn, formally known as Hon Hai Precision Industry and the world’s largest electronics contract manufacturer, has most of its production on the mainland, where many of its parts suppliers are also located, and as a consequence was hit hard by the coronavirus-related curbs that have hurt demand and upended supply chains of manufacturers globally.

The Taiwan-based company, which is Apple’s main assembler of iPhones, in February suffered its biggest monthly drop in revenue in about seven years, as the outbreak played havoc with its business.

Gou told reporters in Taipei that the return to work effort at Foxconn’s factories in China had “exceeded our expectations and imagination”, and that supplies to its plants there and in Vietnam had returned to normal.

Gou, however, warned about weak consumer demand as a result of the coronavirus epidemic, which the World Health Organisation has declared a pandemic. He said the US market was of particular concern.

“In the United States, what we are worried about is the market,” he said. “If production was resumed quickly but consumers stop spending … that would be key to the economic recovery.”

Apple, Foxconn’s top client, has rescinded its March quarter sales guidance, citing a slower ramp up of manufacturing in China after travel restrictions and an extended Lunar New Year break.

Gou said he has “concerns” over the electronics supply chain in Japan and South Korea, which are grappling with their own serious outbreaks of the coronavirus. He also cited rising prices for dynamic random-access memory chips and supply issues with display panels, but did not elaborate.

Foxconn last week warned revenue would drop 15 percent in the first quarter, but said it would recover thereafter as production returns to normal in coronavirus-hit China. Its shares have dropped nearly 18 percent this year.


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