iPhone Maker Foxconn Says Output at Its China Plant Is Recovering

Foxconn, the world’s largest contract electronics maker, said on Thursday output at its iPhone plant in China had “basically returned to normal” and December revenue, down 12.3 percent year-on-year, marked the start of a recovery.

Production of Apple iPhones faced disruption ahead of Christmas and January’s Lunar New Year holidays, after curbs to control COVID-19 prompted thousands of workers to leave Foxconn’s factory lines in China’s Zhengzhou city.

Although lower compared with the previous year, the company said revenue for December was better than it expected and that a “gradual recovery” at its Zhengzhou plant had contributed to “double-digit growth” in revenue for its smart consumer electronics business compared to November.

A Foxconn source familiar with the matter, who could not be named because they were not authorised to speak to the press, said the growth in December compared to the month prior for its consumer electronics business, including smartphones, showed major client Apple did not cut orders.

A high base from a year earlier, when demand for smartphones revived after the early impact of the pandemic, also led to the yearly decline in revenue, the person added.

Revenue for 2022 rose 10.47 percent from the previous year to a record high, driven by growth across major product lines from smartphones to servers, the company said.

In the fourth quarter, the Zhengzhou plant grappled with strict COVID-19 restrictions, now being eased, that fuelled discontent among workers over conditions at the factory. It was also hit by worker unrest over pay.

Foxconn has offered bonuses to attract new workers and convince others to stay on.

A company source told Reuters last month it aimed for the plant to resume full production around late December-to-early January.

Analysts say Foxconn assembles around 70 percent of iPhones, and the Zhengzhou plant produces the majority of its premium models including iPhone 14 Pro.

The company said in Thursday’s statement it expects first-quarter revenue “to be roughly in line with market consensus,” without elaborating.

Analysts expect first-quarter revenue to grow by 5.6 percent year-on-year, according to Refinitiv.

Foxconn shares closed down 0.1 percent, below the broader market which ended up 0.72 percent.

© Thomson Reuters 2023