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.
