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Apple Supplier Foxconn Adjusts Production to Avoid Holiday Blues

The logo of Foxconn is pictured on top of a company's building in Taipei, Taiwan October 31, 2022. REUTERS/Carlos Garcia Rawlins
The logo of Foxconn is pictured on top of a company's building in Taipei, Taiwan October 31, 2022. REUTERS/Carlos Garcia Rawlins
    Asharq A-Awsat
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Apple Supplier Foxconn Adjusts Production to Avoid Holiday Blues

The logo of Foxconn is pictured on top of a company's building in Taipei, Taiwan October 31, 2022. REUTERS/Carlos Garcia Rawlins
The logo of Foxconn is pictured on top of a company's building in Taipei, Taiwan October 31, 2022. REUTERS/Carlos Garcia Rawlins

Apple Inc supplier Foxconn said on Thursday it expected smartphone revenue to fall this quarter and is adjusting production to prevent recent COVID-19 curbs at a massive iPhone factory in China from impacting holiday orders.

Foxconn has grabbed headlines in recent weeks, with tight virus restrictions at its Zhengzhou plant, the world's largest iPhone factory, disrupting production and fueling concerns over the impact of China's virus policy on global supply chains. The plant in China's industrial hub employs about 200,000 people.

Speaking on an earnings call, Chairman Liu Young-way said the Christmas and Lunar New Year holidays are "very important."

"We will definitely work all out to adjust our production capacity and output, so there is no impact on demand for these two holidays," Liu said. He did not give details.

The cost impact of the COVID controls, including offering bonuses to retain workers, will be short term and Foxconn has been working with the government to resume normal production as soon as possible, he added.

On Wednesday, Foxconn said it would continue production in Zhengzhou under a "closed loop" system, where staff live and work on-site in a bubble isolated from the wider world.

Many employees have fled the factory over the rigid controls which have limited people's movement and seen enforced quarantine, with stories of food and medical shortages circulating on social media.

If disruptions persist, it could hamper Foxconn's ability to ship iPhones in what is traditionally the peak season for Taiwan tech firms as they race to supply cellphones and other electronics for the year-end holiday period in Western markets followed by the Lunar New Year in East Asia.

When asked if customers are pushing for production to be distributed to other Chinese cities or outside of China, Liu said that geopolitics is more likely to play a role in restructuring Foxconn's production footprint than the pandemic.

"Of course there may be other factors that require the reconfiguration of production capacity, such as geopolitics," Liu said.

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Google Offers to Loosen Search Deals in US Antitrust Case Remedy

The Google sign is shown on one of the company's office buildings in Irvine, California, US, October 20, 2020. REUTERS/Mike Blake
The Google sign is shown on one of the company's office buildings in Irvine, California, US, October 20, 2020. REUTERS/Mike Blake
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Google Offers to Loosen Search Deals in US Antitrust Case Remedy

The Google sign is shown on one of the company's office buildings in Irvine, California, US, October 20, 2020. REUTERS/Mike Blake
The Google sign is shown on one of the company's office buildings in Irvine, California, US, October 20, 2020. REUTERS/Mike Blake

Alphabet's Google proposed on Friday a loosening of its agreements with Apple and others to set Google as the default search engine on new devices, in a bid to address a US ruling that it unlawfully dominates online search.

The proposal is muchu narrower than the government's push to make Google sell its Chrome browser, which Google called a drastic attempt to intervene in the search market.

Google urged US District Judge Amit Mehta in Washington to move cautiously in deciding what the company must do to restore competition, after his ruling that the company holds an illegal monopoly in online search and related advertising. Courts have cautioned against imposing antitrust remedies that chill innovation, Google said in court papers.

That is especially true "in an environment where remarkable artificial intelligence innovations are rapidly changing how people interact with many online products and services, including search engines," Google said.

While Google plans to appeal that ruling at the end of the case, it says the upcoming "remedies" phase should focus on its distribution agreements with browser developers, mobile device manufacturers, and wireless carriers.

The judge found the agreements give Google a "major, largely unseen advantage over its rivals" and result in most devices in the US coming pre-loaded with Google's search engine.

The agreements are hard to exit, the judge said, especially for Android manufacturers, which must agree to install Google search in order to include Google's Play Store on their devices.

To fix that, Google could make them non-exclusive and, for Android phone manufacturers, unbundle its Play Store from Chrome and search, the company said in its proposal.

Google would allow browser developers that agree to set its search engine as the default to revisit that decision annually under the proposal.

REVENUE SHARING

Unlike the government's proposal, Google's would not end revenue sharing agreements, which pass a portion of ad revenue Google makes from search to the device and software companies that present it as the default search engine.

Independent browser developers including Mozilla, which makes Firefox, have said the funds are crucial to their operations. Apple received an estimated $20 billion from its agreement with Google in 2022 alone.

Kamyl Bazbaz, spokesperson for search engine competitor DuckDuckGo, said the proposal attempts to maintain the status quo.

"Once a court finds a violation of competition laws, the remedy must not only stop the illegal conduct and prevent its recurrence, but restore competition in the affected markets," he said.

Google's proposal sets the stage for a trial Mehta will hold in April, where the US Department of Justice and a coalition of states will seek to show the need for wide-ranging remedies, including making Google sell off Chrome and potentially its Android mobile operating system.

The government plans to call witnesses from OpenAI, AI search startup Perplexity, and Microsoft, according to court papers.

Prosecutors also want Google to stop paying to be the default search engine, and cease investments in search rivals and query-based AI products, and license its search results and technology to rivals.

The proposals aim to spur innovation in online search, where Mehta found Google's overwhelming market share keeps competitors from gathering the search data needed to improve their products, and prevent Google from extending its dominance in search to AI.