Foxconn Cuts Revenue Outlook Following Coronavirus Outbreak

Apple's primary iPhone assembler Foxconn has slashed its 2020 revenue outlook after strict quarantines at its main base in China to guard against the coronavirus outbreak (via Bloomberg).

The company is now projecting a sales increase of 1% to 3% this year, Chairman Young Liu told Bloomberg News in a text message. That’s down from a Jan. 22 forecast of 3% to 5%, before the epidemic spread around the globe, and lags the 5.4% average of analysts' projections.

Foxconn's Zhengzhou plant won't resume production until February 10 following an extended Lunar New Year break, and the company now says that workers returning from outside Henan province will be sequestered for 14 days, while staff who reside within the province will be isolated for one week.

The manufacturer previously claimed the viral outbreak had had a "fairly small impact" on ‌iPhone‌ production, suggesting its factories in other countries like Vietnam, India, and Mexico had been able to fill the gap.

Apple last week closed all of its corporate offices, stores, and contact centers in mainland China through February 9 due to the Wuhan coronavirus outbreak. Apple has around 10,000 direct employees in China, across its retail and corporate divisions.

Close to 60 million people remain under lockdown in China. With the virus death toll rising in recent days, the goal of people returning to work on February 10 is looking increasingly less certain. As a result, the contagion is expected to disrupt Apple's Chinese ‌iPhone‌ supply chain as well as dampen consumer demand and overall economic growth.

The outbreak has killed 492 people worldwide, the majority of which are in China, and infected more than 24,500 people across 25 countries.

Top Rated Comments

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8 weeks ago
Well it’s not like Starbucks where if no coffee you lose that sale forever if people can’t get the iPhone now they will wait and get in a month from now. The sale is not lost just pushed out so it’s a non event
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financial outlooks seem to balance on razor sharp metrics

Right isn’t that ridiculous short term is just a casino. As Buffett says I don’t buy a farm because I think it’s going to rain next week I buy it for decades of production and profit.
Score: 4 Votes (Like | Disagree)
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8 weeks ago


Well it’s not like Starbucks where if no coffee you lose that sale forever if people can’t get the iPhone now they will wait and get in a month from now. The sale is not lost just pushed out so it’s a non event

Wrong! Factories have capacities. They can make a maximum XX iPhones each day so being closed is fewer iPhones made and sold. And all of the expensive manufacturing equipment still have to be paid for (i.e.come out of their profits) even if not being used.
Score: 4 Votes (Like | Disagree)
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8 weeks ago
I work for a company that used to manufacture in China but now we are spread out into Malaysia and Taiwan.(Trump's tariffs did have an impact)

But the issue that everyone has to keep in mind is that even if you aren't assembling your products in China all of the components or a majority of them are still coming from China. Which is why Foxconn's ability to keep up production at their other facilities will still be hampered.
Score: 2 Votes (Like | Disagree)
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8 weeks ago
Virus outbreaks are great opportunity to un-hide any skeletons on your balance sheet.
Score: 1 Votes (Like | Disagree)
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8 weeks ago


If their operations in China completely closed they would expand operations in India and other locations at a faster pace (its in the works to do so to some degree anyway).

People who want an iPhone will just wait. Its not as if they are going to get one from someone other than Apple.

And some may pause, do some research, talk to others and decide to move away from Apple.
Score: 1 Votes (Like | Disagree)
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8 weeks ago


But the issue that everyone has to keep in mind is that even if you aren't assembling your products in China all of the components or a majority of them are still coming from China. Which is why Foxconn's ability to keep up production at their other facilities will still be hampered.

This.

Most people don't seem to get that China not only has skilled labor, it's also where R&D and production of the components happens. The iPhones assembled in India for example, are based on knock-down kits from China.
Score: 1 Votes (Like | Disagree)

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