iPhone Maker Profit Missed in Quarter Before China Covid Turmoil
Hon Hai Precision Industry Co., maker of most of the world's iPhones, warned consumer electronics revenue will fall this quarter as it grapples with a Covid outbreak that walled off its main production base in central China.
The company, known also as Foxconn, reported earnings that missed estimates for the third quarter and said revenue growth will be flat for the current three-month period. Hon Hai is now trying to resume full production after a coronavirus flareup in October triggered a lockdown last week around its biggest factory in Zhengzhou, severely curtailing the flow of goods and people it needs to sustain iPhone assembly.
Executives reiterated that they were working with the government to control the outbreak and get the plant back up and running.
Foxconn's warning on revenue underscores the toll of China's Covid Zero policy, a rigid system of sudden lockdowns and mass testing that's depressed the world's No. 2 economy. The curbs at the factory dubbed “iPhone City” -- a giant complex housing some 200,000 workers that cranks out an estimated four out of five of the world's latest iPhones -- dealt a blow to Apple Inc. and its most important supplier, which had struggled to stem an exodus of workers.
Harsh Covid restrictions are exacerbating the fallout from weakening demand for consumer electronics worldwide. On Thursday, Pegatron Corp., Apple's other big iPhone-making partner, warned that sales would fall in 2022 led by a 15%-20% slide in notebook revenue in the fourth quarter.
In Japan, key chip equipment supplier Tokyo Electron Ltd. slashed its forecast for operating profit this year by 24%, explaining that memory chip makers are pulling back on capital spending. The company said it will likely also lose out
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