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Foxconn works ‘at top speed’ to restore huge factory in China

Taiwanese tech giant Foxconn said it was working quickly to resume full production at its massive plant in central China before the crucial holiday season.

Taiwanese tech giant Foxconn, one of Apple’s main subcontractors, said on Thursday it was working quickly to resume full production at its massive plant in central China before the crucial holiday season.

Foxconn, also known by its official name Hon Hai Precision Industry, is the world’s largest contract electronics manufacturer that assembles gadgets for many international brands.

Most of its factories are located in China, especially the eastern city of Zhengzhou, where lockdowns were imposed last month, in line with Beijing’s zero-covid policy, following a spike in infections.

The massive facility of some 200,000 employees – dubbed “iPhone City” – operates in a “closed loop” bubble.

Apple this week said the facility was running at “significantly reduced capacity” and warned customers about extended wait times for the flagship iPhone 14 Pro and iPhone 14 Pro Max iPhones built there.

“With the support of the Henan provincial government, we will eliminate the infections at the fastest rate to resume full production capacity,” Foxconn chairman Young Liu said in a conversation with investors.

The production delays have come just before the crucial Christmas break for western markets and the Lunar New Year at the end of January.

“The fourth quarter and next year are very important,” said Liu.

“We will do everything we can to adjust our capacity and production to ensure that demand is not affected for the two holidays,” he said.

Foxconn has already said it has lowered its outlook for the last quarter.

Foxconn released third-quarter figures Thursday and said net revenues rose five percent to NT$38.8 billion ($1.22 billion), below previous average estimates of NT$41 billion, according to Bloomberg News.

China is sticking to its strict zero-covid policy, with strict lockdowns, quarantines and testing regimes being imposed after even the smallest outbreaks.

The measures have kept the number of infections low, but created lingering uncertainty for companies in the world’s second largest economy.

Foxconn is the largest private employer in China.

“Maintaining the health of more than a million workers and safe production was the biggest challenge for management,” said Liu.

Panicked workers fled the Zhengzhou site on foot last week after allegations of poor conditions at the factory. Foxconn offered bonuses to employees who stayed on.

Liu, in his talk with investors, blames the strikes on “edited fake videos and information that caused some panic.”

Zhengzhou authorities on Wednesday lifted a week-long lockdown in the city’s remote airport district, but they maintained restrictions in several high-risk neighborhoods, including the Foxconn campus.

The city reported more than 1,200 new infections on Thursday.

Analysts at Morgan Stanley wrote in a research note Monday that Foxconn’s expected fourth-quarter revenue could fall as much as 20 percent in its worst-case scenario, partly due to a 36 percent drop in iPhone manufacturing sales, it reported. Bloomberg News.

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