Apple supplier Foxconn reports 5% rise in third-quarter profit, expects stabilization in Q4

Apple supplier Foxconn reports 5% rise in third-quarter profit, expects stabilization in Q4

By Ben Blanchard and Sarah Wu

TAIPEI (Reuters) – Foxconn, a supplier to Apple and an iPhone assembler, said on Thursday it expects stable revenue in the fourth quarter, as the company struggles to curb the spread of the coronavirus at a major factory in China’s industrial city of Zhengzhou.

Apple expects shipments of its high-end iPhone 14 models to be lower than previously expected after a massive production cut at its virus-hit factory in China slashed its sales forecast for the year-end holiday season.

The Taiwanese company, the world’s largest contract electronics maker officially called Hon Hai Precision Industry Co Ltd, said its July-September quarter net profit rose 5% to NT$38.8 billion from NT$36.98 billion a year earlier.

Eleven analysts expected an average profit of NT$41.3 billion, according to Refinitiv.

Reuters reported last month that Foxconn’s production of Apple’s iPhones at its Zhengzhou factory could fall by as much as 30% in November due to strict restrictions on the spread of the coronavirus.

Foxconn’s main Zhengzhou factory in central China, which employs about 200,000 people and is the world’s largest iPhone factory, has been shaken by resentment over strict measures to curb the spread of COVID-19, with many workers fleeing the site.

Apple, which launched sales of new iPhones in September, said customers will see longer wait times to receive their new products.

Foxconn said Monday that it is working to resume full production at the plant as soon as possible. On Wednesday, it said it would continue production in Zhengzhou under a “closed-loop” system, where employees live and work on-site in a bubble cut off from the wider world.

Foxconn is Apple’s largest iPhone maker, accounting for 70% of iPhone shipments globally. It has other smaller production sites in India and southern China.

Having said on Monday that it will revise its forecast for the fourth quarter given the situation in Zhengzhou, Foxconn said revenue in the last three months of this year will be flat.

No numerical view is provided.

The fourth quarter is traditionally the hot season for Taiwanese tech companies as they race to supply mobile phones, tablets and other electronic devices for the busy end of the year in western markets.

(Reporting by Ben Blanchard and Sarah Wu; Editing by Anne Marie Rowntree and Christopher Cushing)

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