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Foxconn iPhone Assembler Predicts Tough Operating Environment From Pandemics, Inflation, and War
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Foxconn iPhone Assembler Predicts Tough Operating Environment From Pandemics, Inflation, and War

iPhone Assembler Foxconn Forecasts Tough Operating Environment From Pandemic, Inflation, War


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Technology Group, Apple Inc.’s largest iPhone assembler, predicts a more difficult operating environment in 2018, citing the impact of prolonged pandemics, geopolitical events, and inflation on global supply chains.

Wednesday also saw the company announcing that it had restarted some production at its Shenzhen factory after a coronavirus infection forced it to close it earlier this week.

Young Liu,

Foxconn’s chairman, stated that it could take several months to get a better picture of the global supply chain’s direction due to volatile factors. Foxconn’s impact on Ukraine’s ongoing war is minimal, but it could have an inflationary effect that can push up prices and cause pain to the global supply chains, he said Wednesday in earnings calls.

Higher raw-material costs and disruptions in supply chains have been a problem for companies. The Covid-19 pandemic now in its third year has caused production bottlenecks, as well as shortages of critical components like semiconductors. Russia’s invasion in Ukraine has only made things worse. Ports in Ukraine have been closed and oil and commodity prices have soared.

Foxconn, formerly known as Hon Hai Precision Industry Co. in Taiwan, reported that its full-year net profit rose 37% to NT$139.3 Billion, which is equivalent to $4.9 Billion, due to strong demand for cloud and networking products and consumer electronics. However, net profit in the October-December quarter fell by 3% compared to a year ago.

Foxconn is Apple’s largest iPhone manufacturer.


Xing Yun/DDP/Zuma Press

Foxconns outlook this year is positive according to Mr. Liu. Demand for the latest smartphones, cloud and networking products they contract manufacture will continue to be strong. The company forecasts that revenue will remain flat in the current year.

Foxconn announced Wednesday that it will resume production at its Shenzhen campus. This is where the largest contract manufacturer in the world employs tens or thousands of workers, making some iPhones and computers.

Foxconn stated that local authorities gave it permission to do so after Foxconn promised to comply with local rules to create a bubble-like working environment for factory employees. According to the Shenzhen government, such pandemic-control rules require that staff live, work, and travel within the factory campus.

Similar arrangements were used for the Winter Olympics in Beijing earlier this year. The public was barred from access to athletic venues and hotels, and athletes and participants were prohibited from leaving pre-approved locations.

The company’s Shenzhen campuses were closed Monday due to a one-week lockdown. A large number of residents were also forced to remain at home.

Covid-19-related outbreaks have also caused production shutdowns in major Chinese industrial centers, such as Changchun.

Hong Kong, with the help of Beijing, is embracing a ‘dynamic zero Covid’ approach to Covid-19 as countries loosen restrictions. Hospitals have been overwhelmed by an influx of cases, which threatens the financial hub’s confidence. Photo by Bertha Wang/Bloomberg

In recent years, the iPhone assembler has tried to diversify its business from products made by Cupertino’s tech giant. It recently signed partnerships with automakers like Jeep and Chrysler maker to produce electric vehicles.


Los Angeles-based electric-vehicle startup located in Nevada and Los Angeles


On Wednesday, Mr. Liu announced that Foxconn was increasing its efforts in the production of electric vehicles and that it plans to expand into battery-making. He stated in the past that Foxconn aims to supply 10% of the global market annually, or approximately three million electric vehicles, by 2027.

Write to Yang Jie at [email protected]

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