Apple supplier Foxconn December revenue drops 12% y/y

Apple supplier Foxconn December revenue drops 12% y/y
© Reuters. FILE PHOTO: The logo of Foxconn, the trading name of Hon Hai Precision Industry, is seen on top of the company’s headquarters in New Taipei City, Taiwan March 29, 2016. REUTERS/Tyrone Siu/File Photo

By Sarah Wu and Yimou Lee

TAIPEI (Reuters) -Taiwan’s Foxconn, the world’s largest contract electronics maker, said on Thursday revenue in December dropped 12.3% year-on-year after production problems related to COVID-19 controls at a major iPhone factory in China’s Zhengzhou city.

The company said in a statement, however, production at the factory in China “basically returned to normal” in December. It did not elaborate.

The company said revenue for December was better than its own expectations 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 said the “significant growth” in December compared to the month prior for its consumer electronics business including smartphones showed that major client Apple (NASDAQ:AAPL) did not cut orders for its popular iPhones.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.

In the fourth quarter of 2022, the Zhengzhou plant grappled with strict COVID-19 restrictions that fuelled discontent among workers over conditions at the factory.

Production of the Apple device was disrupted ahead of Christmas and January’s Lunar New Year holidays, after a COVID-19 outbreak and curbs taken to control the virus prompted thousands of workers to leave. It was also hit by a bout of worker unrest over payment issues.

Foxconn has been offering bonuses to attract new workers and convince those still there to stay on. A company source told Reuters last month that it was aiming for the plant to resume full production around late December to early January.

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

Source: Reuters