Foxconn warned Tuesday that its first quarter revenue may decline 15% as a result of the Covid-19 epidemic as the Taiwanese manufacturer struggles to restore normal production levels in its China factories.
Why it matters: The warning from Foxconn, China’s biggest private-sector employer, highlights the effect that the Covid-19 outbreak has had on the country’s economy, especially in the electronics industry.
- Foxconn, formally known as Hon Hai Precision Industry Co Ltd., has been actively pushing to resume production in China. However, the Covid-19 epidemic has stopped many migrant workers from returning to work after the Spring Festival holiday.
Details: Foxconn said its revenue would drop 15% year on year in businesses including consumer electronics and enterprise products in the first quarter, Reuters reported, citing company Chairman Liu Young-Way.
- The company said its revenue would recover after the first quarter as production returns to normal in China.
- The virus will have a short-term impact on Foxconn’s business as the impact to its supply chain was “not that great,” the company said.
- “Prevention of the outbreak, resumption of work and production are our top priority,” Liu said.
Context: Foxconn booked NTD 1.054 trillion (around $35.2 billion) in revenue in the first quarter of 2019.
- In order to lure workers back to plants, Foxconn’s main iPhone assembly factory in the central Chinese city of Zhengzhou was reportedly offering bonuses of up to RMB 7,000 (around $1,005) to each new recruit.
- Chinese officials have also urged factories to restart operations. Local governments and enterprises have been sending trains, buses, and planes to transport workers back to manufacturing hubs such as Shenzhen and Dongguan in Guangdong province.
- Chinese President Xi Jinping has called for local governments to “continue to make unremitting efforts in various prevention and control work and resume work and production in an orderly manner,” according to state media Xinhua.