A Covid epidemic in the Chinese city of Zhengzhou, where the business has the biggest iPhone assembly facility in the world, caused some shipments to be delayed, according to a report by Hon Hai Precision Industry Co., whose sales for November were down 11.4% from the same month last year. The business, widely known as Foxconn, said that the pandemic had its greatest impact in November and that it anticipates fourth-quarter results to be "approximately in line with market consensus." Government lockdowns, a workforce exodus, and violent protests at the production site were all brought on by the Covid outbreak.
The majority of iPhone Pro phones sold worldwide are put together in Apple Inc.'s Zhengzhou facility in central China, making it crucial to the company's ability to meet demand. Apple has stated that it anticipates delivery delays this year due to disruption, and experts have provided a succession of more pessimistic shipping projections for this year. This month, UBS predicted that the entire iPhone 14 generation may fall 16 million shy of initial projections.
In Taiwanese trade on Tuesday, Hon Hai shares fell as much as 2.4%, the most since October, while Apple's price fell less than 1%.
In order to calm customers' fears, Foxconn assured them that the issue has been "taken under control" and that business will pick up the remainder of the year.
According to Foxconn, "we have started to recruit new staff as well as reallocating production capacity of different plants, and are progressively working toward the direction of restoring production capacity to normal."
China is easing Covid restrictions in some cities, including Zhengzhou, where officials declared on Sunday that Covid testing is no longer required to board buses, subway trains, taxis, and other public transportation vehicles in addition to those who leave the city or visit karaoke bars and internet cafes. According to a message published on WeChat, Foxconn is continuing with closed loop operations and limiting employees' access to the workplace and their dorms.
Hon Hai may be able to meet or exceed its 4Q guidance thanks to China's relaxation of the Covid-Zero policy, according to a note written on Monday by Bloomberg Intelligence analysts Steven Tseng and Sean Chen.
