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Coronavirus to Cause Foxconn Revenue Decline

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Major Taiwanese manufacturing company Foxconn warned that its revenue would drop 15% in its consumer electronics and enterprise products businesses in the first quarter of 2020 due to impact of the coronavirus outbreak. However, the company expects that its manufacturing operations will recover in Q2, as Reuters reported today. 

Foxconn is one of the many global manufacturers that have been hit by suspension of operations and manufacturing capacity following the COVID-19 outbreak. The outbreak has negatively impacted tech supply chains and has also reportedly hit demand for certain PC components in China

Foxconn’s top customer, Apple, said in its March quarterly sales guidance that manufacturing of iPhones in China will see a slower ramp-up due to the travel restrictions imposed by the Chinese government, as well as the extended Lunar Year holiday.

The Taiwainese manufacturer said that it doesn’t expect any revenue growth in the first half of 2020 and expects a “mild downward revision” for the year due to coronavirus. It previously said in its guidance for the year that it expects “slight growth."

The company also noted that although the impact on its supply chain was “not that great" and that it doesn’t believe the impact will be long-term. Foxconn expects to resume normal production in China by the end of March. 

Foxconn said that long-term cooperation with suppliers means that it shouldn’t see an increase in component prices during this period.

It remains to be seen if the outbreak will end up affecting the release schedule of Apple’s new iPhones this year. Usually, Apple sends some of its engineers in the first few months of the year to perfect the new models, as noted by unnamed Reuters sources, but this year the Chinese government imposed travel restrictions. 

Foxconn Chairman Liu Young-Way told Reuters that Foxconn has not seen “great impact” on client’s new product launches, primarily due to Foxconn's advanced assembly capacity.