iPhone Manufacturer Foxconn Reports Revenue Decline Following Unrest And Covid Outbreak At A Key China Plant

  • Foxconn reported November revenues of 551.1 billion new Taiwan dollars ($18.05 billion), a decrease of more than 29% compared to October and a decline of more than 11% compared to November 2021.
  • The Taiwanese company attributed the decline to “production gradually entering off-peak seasonality and a portion of shipments being affected by the Zhengzhou epidemic.”
  • Foxconn operates the world’s largest iPhone assembly plant in the Chinese city of Zhengzhou. Foxconn struggled to contain a Covid outbreak in the factory at the end of October.

Foxconn, the world’s largest contract electronics manufacturer, reported a sharp decline in November revenue on Monday, citing a Covid outbreak and worker unrest at the largest iPhone factory in China.

The Taiwanese company, also known as Hon Hai Precision Industry Co, reported last month’s revenue of 551.1 billion new Taiwan dollars (approximately $18.05 billion), a decrease of more than 29% from October and more than 11% from November 2021.

Foxconn attributed the decline to “production gradually entering off-peak seasonality and a portion of shipments being affected by the Zhengzhou epidemic.” The company provided no further information.

Foxconn operates the world’s largest iPhone assembly plant in the Chinese city of Zhengzhou.

Late in October, the Zhengzhou factory was struck by an outbreak of Covid, and Foxconn fought to contain it by testing and isolating infected workers, as well as effectively locking down the plant.

Numerous employees fled the factory shortly after the outbreak broke out.

Last month, employees at the Zhengzhou plant clashed with security personnel, and some workers took to social media to express their displeasure over what appeared to be a delay in bonus payments. Foxconn later apologized for a “technical error” that led to the pay problems.

Foxconn announced last month a series of bonuses to entice workers to return to the factory.

Foxconn did not address the infrequent labor unrest in its November revenue update, but the company did report that the Covid outbreak was under control.

“At this time, the overall situation with the epidemic has been brought under control, with November being the most affected month,” the company said.

“In addition to reallocating the production capacity of various factories, we have also begun recruiting new employees and are gradually moving in the direction of restoring normal production capacity.” The outlook for the fourth quarter is anticipated to be roughly in line with the consensus of the market, the report continued.

Given Apple’s reliance on the Zhengzhou factory for global iPhone production, investors will now closely monitor the company’s response.

Evercore ISI analysts estimated that the issues at Foxconn could affect the production of between 5 million and 8 million iPhones in the December quarter, primarily at the premium end of Apple’s smartphone lineup.

This could have a $5 billion to $8 billion negative impact on Apple’s revenue, the advisory firm noted.

This article has been updated to reflect the correct conversion from new Taiwan dollars to U.S. dollars.

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