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

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However, for the Taiwan-based company, which is Apple's main assembler of iPhones, production issues have now been replaced by U.S. sales concerns.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