Foxconn Says Output is Recovering Despite 12% Revenue Drop

Output at Foxconn’s iPhone plant in China is recovering despite a 12.3% drop in revenue in December from a year earlier, the world’s largest contract electronics maker said on Thursday.

The Taiwanese firm said production at its Zhengzhou plant had seen a gradual recovery which has contributed to “double-digit growth” in revenue from November to December.

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.

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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 that major client Apple did not cut its 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% from the previous year to a record high, driven by growth across major product lines from smartphones to servers, the company said.

Covid-19 Disruption

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.

Analysts say Foxconn assembles around 70% of Apple’s 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% year-on-year, according to Refinitiv.

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