The industrial group Foxconn, manufacturer of electronic devices for Apple in particular, wanted to reassure about the negative effects of the confinement in place in several Chinese cities. Eventually, the damage should be less than expected.
Zero Covid Policy
The Chinese authorities have decided to apply the zero Covid policy: in the slightest case, very strict confinement is applied in an entire area. For this reason, Shanghai residents have been stuck at home since mid-March with no way to get out, shutting down some factories and slowing production in those that have remained open.
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Indeed, some establishments continued to operate in a closed circuit, that is to say that the workers were not allowed to leave the factory and had to sleep there. This is particularly what happened in some Foxconn factories. As a reminder, the manufacturer has more than 30 manufacturing complexes in China, making this country its largest construction base.
Foxconn managed to maintain productivity
In April, the Taiwanese company, and the largest manufacturer for Apple, recorded 16.76 billion dollars in revenue, a decrease of 4.1% compared to the previous month. By comparison, iPhone assembler Pegatron and MacBook maker Quanta Computer saw their revenues drop 35% and 40%, respectively, due to the Shanghai lockdown, reports. Nikkei Asia.
Foxconn supplies electronic components to some of the world’s largest technology companies. Photo: Puddingworld / Wikimedia
” The overall impact of the lockdown on Foxconn is rather limited. This shows in our April earnings, and May’s performance is also better than we had estimated. We had previously forecast that this year we would maintain a similar level to last year, after taking into account inflation, war [en Ukraine] and other uncertainties, but now we believe the full year will be better than our estimate said Young Liu, chairman of Foxconn.
Indirectly, this news is very good for Apple.
Apple expected major losses due to the Chinese health situation
On the announcement of its balance sheet for the second quarter of its fiscal year, ranging from January to March 2022 and particularly lucrative with sales of the iPhone reaching 50.57 billion dollars, the apple brand scared investors when it warned that fiscal third quarter sales could be reduced by $8 billion due to several issues, including supply chain constraints as a result of the lockdown in China.
Obviously, Apple’s losses should be much more limited than expected, even if the company should still be impacted by the situation, to which is also added the shortage of semiconductors. Nevertheless, things should improve as Shanghai emerges from its quarantine, as is currently the case.
Despite everything, the Cupertino company continues the impressive performance since the start of the pandemic, see you in July to find out the financial results of its second fiscal quarter.