iPhone Production Resumption in China Exceeds Foxconn's Expectations, But US Sales Concerns Remain

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The founder of iPhone assembler Foxconn said on Thursday that the resumption of production at its factories in China had "exceeded expectations," following the coronavirus-related disruption of supply chains (via South China Morning Post).

[Terry Gou Tai-ming] told reporters that the return to work effort at Foxconn's factories in China had "exceeded our expectations and imagination," and that supplies to its plants there and in Vietnam had returned to normal.

Foxconn slashed its 2020 revenue outlook after strict quarantines were enforced at its China plants for a period in February to guard against the coronavirus outbreak. The manufacturer went on to suffer its biggest monthly drop in revenue in about seven years because of the containment measures.

The manufacturer had earlier 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.

China's coronavirus epidemic has passed its peak, its top health commission said on Thursday. It logged just eight new infections in Hubei province, the first time the epicenter of the outbreak recorded a daily tally of less than 10. Following the slowdown of the spread of the virus, more businesses have reopened in China as authorities ease strict containment measures.

However, for the Taiwan-based company, which is Apple's main assembler of iPhones, production issues have now been replaced by U.S. sales concerns.

"In the United States, what we are worried about is the market," said Guo. "If production was resumed quickly but consumers stop spending... that would be key to the economic recovery."

The Foxconn founder also raised concerns about the electronics supply chain in Japan and South Korea, which are grappling with their own serious outbreaks of the COVID-19 disease. Gou also cited rising prices for RAM chips and supply issues with display panels, but didn't elaborate.

In China last month, Apple sold fewer than 500,000 iPhones amid the ongoing curbs on travel and transport – a 60 percent slump in ‌iPhone‌ sales compared to the February 2019 quarter.

Apple in mid-February announced that its financial guidance for the March quarter would fall short due to the COVID-19 outbreak. During the January earnings call, Apple said it expected to see revenue of $63 to $67 billion in the March quarter, but that is no longer a goal the company will be able to meet.

Apple cited lower customer demand in China and constrained ‌‌‌iPhone‌‌‌ supplies worldwide as the factors leading to lower than expected revenue.

Top Rated Comments

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7 months ago
For those of you who think we should move iPhone production to the U.S. to avoid 'interruptions', a rude awakening is coming. The way the U.S. has so incompetently and lackadaisically responded to the outbreak, it would be the last place a manufacturer would want to move production to. As it stands, even Italy is a better candidate for iPhone production.

We should have been churning out and stockpiling COVID-19 test kits weeks ago. Even though this is now officially a pandemic and a public health emergency, I'd have to PAY almost $300 for a COVID-19 test even with my insurance coverage. The cost for those without insurance – and there are many who are without – is more than $1400. That is a prohibitive price when almost 40% of adults can't afford a $400 emergency.

The test should be made free-of-charge, not only because this is an emergency, but because it would encourage those with symptoms to get themselves checked out instead of ignoring them and hoping it's just the common flu.
Score: 10 Votes (Like | Disagree)
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7 months ago
Apple will only make a Fantastillion dollars this quarter instead of the usual Gazillion.
Score: 6 Votes (Like | Disagree)
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7 months ago


I’m extremely curious as to what Apple will release this year and the extent of shortages / delays.

Even if the virus stops spreading in a few weeks, the effects are going to be felt probably until next year.

Apple will sell less iPhones this year and is not just a matter of lower supply. People are losing their jobs due to the crisis, and even if you keep your job chances are you are losing money. Think about restaurants, bar, small retails.
Those people will be on low budget for months and won't be able to afford the new iPhone this fall. This is not the end of the world for Apple, but even if the 5G novelty will likely help sales they cannot expect to sell the same number of phones as last year.
Score: 2 Votes (Like | Disagree)
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7 months ago
One does NOT need to be a Rocket Scientist to realize that few will probably purchase iPhones OR iPads costing $1K OR more this year.
Score: 2 Votes (Like | Disagree)
Avatar
7 months ago
Should I spend $1,000 on an new iPhone that I don't need OR spend $1,000 on a stockpile of toilet paper that I don't need? ?

Damn, these first world problems!
Score: 1 Votes (Like | Disagree)
Avatar
7 months ago
Apple is not concerned. We're not really concerned. Only investors/Wall Street are concerned because even as a pandemic grips the planet they are only ever concerned with consistent but sometimes unsustainable increases in revenue. They'll make a lot of noise but they will still make a pile of money. Apple has weathered worse.
Score: 1 Votes (Like | Disagree)

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