iPhone Assembler Foxconn Set to Update Q4 Outlook After COVID Curbs Lifted at Major China Plant

Apple supplier and iPhone assembler Foxconn plans to update its fourth-quarter outlook on Thursday, having warned this week of the impact of COVID-19 restrictions at a major plant in China's Zhengzhou.

Foxconn's main Zhengzhou plant in central China, which employs about 200,000 people, has been rocked by discontent over stringent measures to curb the spread of COVID-19, with many workers fleeing the site.

The lockdown ended on Wednesday, though Foxconn said it was maintaining "closed loop" operations, referring to a bubble-like arrangement commonly imposed as part of virus prevention measures in China, where employees sleep, live and work isolated from the wider world.

Foxconn said on Monday it was working to resume full production there as soon as possible, and, having previously guided for "cautious optimism" in the fourth quarter, said it would "revise down" its outlook given events in Zhengzhou, though provided no details.

Foxconn will release its third-quarter earnings on Thursday at 12:30pm IST, with analysts expecting on average a profit of TWD 41.3 billion (roughly Rs. 10,600 crore), according to Refinitiv, an 11.7 percent year-on-year increase, benefiting from sustained demand for high-end consumer electronics and data centres.

The company said it will also provide an update on its view for the current quarter; though it does not provide a numerical outlook, only a broad forecast in terms of the general direction.

A source familiar with the matter said Foxconn aims to resume full production at its Zhengzhou plant by the second half of November.

Apple said on Monday it expects lower shipments of high-end iPhone 14 models than previously anticipated following a significant production cut at the virus-blighted plant in China, dampening its sales outlook for the year-end holiday season.

The fourth quarter is traditionally the hot season for Taiwan's tech companies as they race to supply cellphones, tablets and other electronics for the year-end holiday period in Western markets.

Shares in Foxconn, formally called Hon Hai Precision Industry Company, closed up 2.5 percent on Wednesday, outperforming the broader market's 2.2 percent rise.

The shares have fallen 1.4 percent so far this year.

© Thomson Reuters 2022