Covid’s Putting A Dent In Foxconn’s Business

Covid’s Putting A Dent In Foxconn’s Business

about 1 year ago2 mins

Mentioned in story

Foxconn announced on Monday that Covid disruptions have put a sizable dent in its business.

What does this mean?

China’s heavy-handed approach to Covid has rocked businesses in every corner of the country, and Foxconn, the world’s biggest contract electronics manufacturer, was no exception. When Covid cases started to tick up in Zhengzhou in October, Foxconn leaped into action and put its plant under so-called “closed loop” production – that is, it insisted staff live on site. But when even that failed to put a lid on infections, workers fled, throwing the company for a loop just as Christmas production targets started looming. All in all, then, recent weeks brought Foxconn two staff walkouts and a spate of testy protests about working conditions. So it’s no surprise business has suffered: November’s revenue came in 29% lower than October’s, marking the first time the metric has dropped in November for 12 years.

Foxconn revenue

Why should I care?

Zooming in: A cored Apple.

There were probably tears in Apple HQ when the firm got wind of the mess at the world’s biggest iPhone factory. See, analysts say that Foxconn’s trouble hit Apple hard, dragging the iPhone’s market share in China to 20.1%, versus 27.5% at the same time last year. That could end up throwing a wrench in the works for the all-important holiday season – so much so that some analysts think Apple will be reaching out to suppliers that usually produce lower-end models to help pick up the slack.

iPhone wait times
Source: The Wall Street Journal

The bigger picture: Beyond China.

The prospect of rivals vacuuming up Apple contracts will come as a shock to the system for Foxconn, and the company will probably pull out all the stops to keep its biggest customer loyal. That could mean beefing up production capacity in countries where Covid restrictions are more relaxed, like India, Indonesia, and Vietnam – places where the firm's operations are currently tiny compared to its business in China.

Finimize

BECOME A SMARTER INVESTOR

All the daily investing news and insights you need in one subscription.

Disclaimer: These articles are provided for information purposes only. Occasionally, an opinion about whether to buy or sell a specific investment may be provided. The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment advisor.

/3 Your free quarterly content is about to expire. Uncover the biggest trends and opportunities. Subscribe now for 50%. Cancel anytime.

Finimize
© Finimize Ltd. 2023. 10328011. 280 Bishopsgate, London, EC2M 4AG