Foxconn China Factories' Work Resumption Beats Expectations, Says Founder Terry Gou

Terry Gou, founder of Apple's major manufacturing partner Foxconn, said on Thursday the resumption of production at its factories in China had "exceeded expectations" after a prolonged halt due to a coronavirus outbreak that had disrupted supply chains.

Foxconn, the world's largest contract electronics maker, has most of its production in China, where many of its suppliers are also located, and as a consequence was hit hard by the virus-related curbs that have hurt demand and upended supply chains of manufacturers globally.

The Taiwan-based company, which assembles Apple's iPhones, in February suffered its biggest monthly drop in revenue in about seven years as the outbreak play havoc with its business.

Gou told reporters in Taipei that the return to work at Foxconn factories in China had "exceeded our expectations and imagination" and that supplies to its factories there and in Vietnam had returned to normal.

Gou, however, warned about weak consumer demand as a result of the coronavirus epidemic which the World Health Organization has now declared a pandemic, and said the US market was of particular concern.

"In the United States, what we are worried about is the market. If production was resumed quickly but consumers stop spending...that would be key to the economic recovery," he said.

Apple, Foxconn's top client, rescinded its March quarter sales guidance citing a slower ramp up of manufacturing in China after travel restrictions and an extended Lunar New Year break.

Gou said he has "concerns" over the electronics supply chain in Japan and South Korea, which are grappling with their own serious outbreaks of the virus, and he cited rising prices for DRAM memory and supply issues with display panels. He did not elaborate.

Foxconn, formally called Hon Hai Precision Industry, last week warned revenue would drop 15 percent in first quarter, but said it would recover thereafter as production returns to normal in virus-hit China. Its shares have dropped nearly 18 percent this year.

© Thomson Reuters 2020

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