- Foxconn predicted that the lockdown to prevent the Covid-19 epidemic in China will no longer seriously affect the supply chain.
- Although China’s strict COVID-19 control measures have had only a limited impact on production, demand for products in the country has declined.
The situation of production and supply chain shows positive signs
According to Nikkei Asia, Foxconn believes that the lockdown policies to prevent the Covid-19 epidemic in China will no longer seriously affect the supply chain as it predicted.
Previously, Foxconn forecast that the production situation would be similar to last year due to the impact of inflation, the Russia-Ukraine conflict and other issues. But the reality shows that the company earned $ 16.76 billion in April, only a decrease of 4.1% compared to the previous month.
Foxconn Chairman Liu Young-way said that the group’s production facilities are operating at normal capacity and the product development process is progressing well. Therefore, the industry outlook for the quarter and the whole year is likely to be more positive. “The impact of the blockade order on Foxconn is not much. This can be clearly seen in April’s revenue and better-than-expected May performance,” said Mr. Young-way.
Prolonged global chip shortages have forced automakers to partially halt production and affected the production of phones and smart devices, including major partners like Apple.Inc. “A car worth tens of thousands of dollars cannot ship because of a small chip worth fifty cents. This is a difficulty for many of our partner customers,” said Mr. Liu.
“We are quite confident in the stability of our supply chain in the second half of this year,” Liu said at the company’s annual shareholder meeting. Foxconn is aiming to become the first electric vehicle (EV) manufacturer “with no shortage of raw materials” with a goal of capturing about 5% of the global electric vehicle market by the end of 2025, and said it is increasing EV chip manufacturing capacity, most of which are low-end small integrated circuits including and those used in power management.
Still need certain awareness
However, the company warned this month that revenue from its electronics business, which includes smartphones, could decline this quarter due to rising inflation, cooling demand and climbing supply chain issues. partly due to social distancing in China.
Foxconn reiterated that, although China’s strict COVID-19 control measures have had only a limited impact on production because it keeps workers onsite in a “closed-loop” system, demand for their products in the country has declined as most people are still confined to their homes.
Foxconn Group also said that it will continue to take appropriate measures to deal with the Covid-19 situation in China, and at the same time improve the closed management mechanism in factories to minimize the risk of supply chain disruption. response. “The regulations in the epidemic situation will continue to take place in the future. Therefore, we need to make sure the production processes are still operating normally,” said the Foxconn CEO.
Previously, at the end of March, the authorities of many major Chinese cities had imposed a blockade order because of the appearance of many Covid-19 cases. Soon after, Foxconn had to suspend production at many of its factories in Shenzhen.