Foxconn sees COVID-hit China plant back at full output in late Dec-early Jan

TAIPEI –

Apple provider Foxconn 2317.TW expects its COVID-hit Zhengzhou plant in China to renew full manufacturing round late December to early January, a Foxconn supply mentioned on Monday, after employee unrest final month disrupted the world’s largest iPhone manufacturing facility.

The world’s largest contract electronics maker afterward Monday mentioned income in November fell 11.4% yr on yr reflecting manufacturing issues associated to COVID-19 controls on the main iPhone manufacturing facility.

“At present, the overall epidemic situation has been brought under control with November being the most affected period,” the corporate mentioned in a press release, including it has began to recruit new workers and was step by step “restoring production capacity to normal.”

Foxconn mentioned November income for its sensible shopper electronics business, which incorporates smartphones, declined yr on yr partly resulting from a portion of shipments being impacted by manufacturing disruptions in Zhengzhou. It didn’t elaborate.

The Zhengzhou plant has been grappling with strict COVID-19 restrictions which have fuelled discontent amongst staff over situations on the manufacturing facility. Production of the Apple AAPL. O system was disrupted forward of Christmas and January’s Lunar New Year holidays, with many staff both having to isolate to fight the unfold of the virus or fleeing the plant.

Following the November unrest, that noticed staff conflict with safety personnel, Foxconn may have seen greater than 30% of the Zhengzhou website’s November manufacturing affected, Reuters reported final month citing a supply aware of the matter. Foxconn hasn’t disclosed particulars of the affect of the disruption on its manufacturing plans or funds.

Analysts say Foxconn assembles round 70% of iPhones, and the Zhengzhou plant produces the vast majority of its premium fashions together with iPhone 14 Pro.

“The capacity is now being gradually resumed” with new workers hiring underway, mentioned the individual with direct data of the matter. The individual declined to the named as the knowledge was personal.

“If the recruitment goes smoothly, it could take around three to four weeks to resume full production,” the individual mentioned, pointing to a interval round late December to early January.

Foxconn and the native authorities are working arduous on the recruitment drive however many uncertainties stay, in line with the supply. The individual cited “fears” some staff may need about working for the corporate after the plant was hit by protests final month that typically turned violent.

“We are firing on all cylinders on the recruitment,” the individual mentioned.

Foxconn declined to remark.

A second Foxconn supply aware of the matter mentioned the corporate is hoping to renew full manufacturing “as soon as possible” however was not capable of give a timeline.

“The situation has stabilized,” the individual mentioned, referring to the protests and the federal government’s easing of COVID restrictions. “The local government is actively helping with the resumption.”

The Taiwanese firm mentioned final month it expects a slight decline in fourth-quarter revenues year-on-year for its sensible shopper electronics business and vital progress for cloud and community merchandise.

Foxconn mentioned on Monday its total income within the fourth quarter was anticipated to be “roughly in line with market consensus,” with out elaborating. It didn’t provide a contemporary outlook for its numerous business sectors.

The firm mentioned final month that income within the last three months of this yr can be flattish, and that it has a comparatively conservative outlook for 2023. Read full story

Foxconn shares closed flat, in keeping with the broader market which ended up 0.1%.

Worker unrest strikes main iPhone suppliers’ income.

(Reporting by Yimou Lee and Ben Blanchard; modifying by Kenneth Maxwell and Jason Neely)