Apple’s Foxconn warned that revenue would fall 15 percent in companies including consumer electronics and corporate products in the first quarter, but would recover after that as production returned to normal in the virus-stricken China. Foxconn is among the manufacturers worldwide that are struggling with the virus-related restrictions that have raised supply chains and hurt demand. Apple, its biggest customer, canceled its sales guidance in the last quarter of March, citing a slowdown in manufacturing in China amid travel restrictions and the lunar New Year holiday.
The Taiwanese company, which collects the Apple iPhone, said it did not expect to see any revenue growth in the first half and a “slight downward review” of the original guidance for “slight growth” for the year due to the SK virus.
While he did not give any details, Foxconn indicated that the effect of the virus would be short-lived and that the effect on its supply chain was “not that great.”
“Prevention of disease outbreaks and the resumption of work and production is our top priority,” Chairman Liu Youngway said at an online investor conference on Tuesday.
Total manufacturing activity in China has been disrupted by travel restrictions and quarantine requirements aimed at containing the Coronavirus, which can be transmitted from person to person.
The influenza-like virus, which originated in China, has spread to more than 60 countries. It has infected more than 86,000 people and killed more than 3,000 people, most of them in China.
However, Foxconn has sought to calm investor concerns about the impact of the virus, saying it expects normal production in China, its highest manufacturing base, to resume by the end of March.
Chairman Liu said the company’s “long-term cooperation” with suppliers will also help provide protection against price increases for some components.
Any disruption in Foxconn, officially called Hon Hai Precision Industry Co Ltd, that would block Apple’s timeline for new phones.
Supply chain experts say Foxconn tends to deal with the launch of the new iPhone because its capabilities are more advanced, but the schedule may be threatened due to travel restrictions.
Former engineers and supply chain experts said that Apple engineers usually go to Asia in the first few months of the year to master the production of new models.
Liu said he had not seen “a major impact” on the launch of new products to customers, indicating advanced assembly capacity.
Apple’s operations at Foxconn fall into the consumer electronics business, which accounts for more than half of its revenue. Its enterprise products business includes servers and communications products.