iPhone maker Foxconn says production is recovering at its factory in China

Foxconn, the world’s largest contract electronics manufacturer, said Thursday production at its iPhone plant in China was “basically back to normal” and December revenue, which fell 12.3 percent year-on-year, marked the beginning of a recovery.

production of Apple iPhones faced disruption ahead of the Christmas and Lunar New Year holidays in January after restrictions to control COVID-19 prompted thousands of workers to leave the company Foxconn’s Factory lines in the Chinese city of Zhengzhou.

Though lower than a year earlier, the company said December sales were better than expected and that a “gradual recovery” at its Zhengzhou plant contributed to “double-digit sales growth” for its smart consumer electronics business compared to November .

A Foxconn source familiar with the matter, who could not be named because she was not authorized to speak to the press, said month-on-month growth in December for its consumer electronics business, including smartphones, showed that the Major customer Apple did not cut orders.

A high base from last year, when demand for smartphones rebounded after the early impact of the pandemic, also led to the annual decline in sales, the person added.

Revenue for 2022 rose 10.47 percent year-on-year to a record high, driven by growth across key product lines from smartphones to servers, the company said.

In the fourth quarter, the Zhengzhou plant struggled with strict COVID-19 restrictions that are now being eased, fueling workers’ dissatisfaction with conditions at the factory. It has also been hit by workers’ unrest over pay.

Foxconn has offered bonuses to attract new employees and persuade others to stay.

A company source told Reuters last month that the plant is expected to resume full production from late December to early January.

Analysts say Foxconn assembles around 70 percent of iPhones, and the Zhengzhou plant produces the majority of its premium models, including the iPhone 14 Pro.

The company said in Thursday’s statement it expected first-quarter earnings to be “roughly in line with market consensus,” without elaborating.

Analysts expect first-quarter revenue to grow 5.6 percent year-on-year, according to Refinitiv.

Foxconn shares closed 0.1 percent lower than the broader market, which ended up 0.72 percent.

© Thomson Reuters 2023