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https://scmp.com/tech/big-tech/article/3049100/iphone-maker-hon-hai-cuts-2020-sales-outlook-impact-coronavirus Big Tech
iPhone maker Hon Hai cuts 2020 sales outlook on impact of coronavirus outbreak
- Foxconn workers returning from outside Henan province, site of its main factory in Zhengzhou, will be isolated for 14 days
- Virtually all of the world’s iPhones are made in China, primarily by Hon Hai in Zhengzhou and by Pegatron at an assembly site near Shanghai
A security guard stands at the front door of the Foxconn factory in Guiyang, Guizhou Province, China. Photo: EPA-EFE
Hon Hai Precision Industry, Apple’s main production partner, has cut its 2020 revenue growth outlook after assessing the potential impact of the coronavirus outbreak.
Foxconn’s Hon Hai, which makes the vast majority of the world’s iPhones from the central Chinese city of Zhengzhou, is now projecting a sales increase of 1 per cent to 3 per cent this year, chairman Young Liu told Bloomberg News in a text message. That is down from a January 22 forecast of 3 per cent to 5 per cent before the epidemic spread further around the globe.
Separately, Hon Hai said in a statement Wednesday that workers returning from outside Henan province, site of its main factory in Zhengzhou, will be sequestered for 14 days. Any staff reporting to work who reside within the province itself will be isolated for 7 days, the company added.
Hon Hai, known also as Foxconn, makes the vast majority of the world’s iPhones from Zhengzhou, central China. The company has become a high-profile symbol of how the outbreak, which has killed about 500 worldwide, could disrupt the world’s supply of made-in-China electronics.
The contagion is expected to disrupt Apple’s carefully calibrated production chain centred on China, while also damp consumer demand and overall economic growth.
Hon Hai, an important manufacturer also for major brands from HP to Sony, said Tuesday it still expects to be able to restart facilities throughout China on schedule, according to a text message sent to Bloomberg News. Suppliers such as Quanta Computer, Inventec and LG Display also said they would go back to work next week in China.
But while Chinese officials and companies have targeted February 10 as the date to resume work in much of the country, doubts about the timing have grown in recent days as the virus death toll rises, workers find themselves stuck in municipal lockdowns and the transport of people and goods has been hampered.”
Apple in January issued a wider-than-usual sales forecast to reflect what CEO Tim Cook called “uncertainty” caused by a virus outbreak in one of its most important markets. Smartphone sales -- particularly in China -- are expected to take a big hit from the coronavirus outbreak after government-imposed containment measures snarled logistics and emptied out stores.
Hon Hai’s Hong Kong-listed unit FIH Mobile makes phones for Xiaomi and Huawei Technologies. Research firms vary in their estimates of how big the shipments drop-off will be, reflecting the still-developing nature of the virus outbreak - but they agree it will hurt. Strategy Analytics forecasts a 32 per cent decline in Chinese shipments in the first quarter, to 60 million from roughly 89 million shipments a year earlier. Canalys, starting from a similar estimate for 2019, scythes its expectations down to 42.5 million shipments.