Breaking News
Get Actionable Insights with InvestingPro+: Start 7 Day FREE Trial Register here
Investing Pro 0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

Exclusive: Outbreak to hit iPhone output if China extends Foxconn factory halt - source

Stock MarketsFeb 04, 2020 05:43AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
© Reuters. FILE PHOTO: CEO Tim Cook presents the new iPhone 11 at an Apple event at their headquarters in Cupertino

By Yimou Lee

TAIPEI (Reuters) - Foxconn could see a "big" production impact and shipments to customers including Apple face disruption if a Chinese factory halt due to the coronavirus outbreak extends into a second week, a person with direct knowledge of the matter said.

Taiwan's Foxconn (TW:2317), which makes smartphones for Apple (O:AAPL) and other brands, has halted "almost all" of its production in China after companies were told to shut until at least Feb. 10, the source said, adding that an extension of the stoppage could disrupt shipments to clients including Apple.

Taipei-based Foxconn, which is the world's largest contract electronics maker, did not immediately respond to a request for comment, while Apple declined to comment.

The source told Reuters on Monday that Foxconn has so far seen a "fairly small impact" from the outbreak as it was utilizing factories in countries including Vietnam, India and Mexico to fill the gap, adding that the company will be able to make up for the delay if factories work overtime after the ban.

In Eastern China's Suzhou, one of its largest manufacturing hubs, companies have been told to stay shut until at least Feb. 8 and in Shanghai until Feb. 9. Factories in the southern manufacturing hub of Dongguan in export-oriented Guangdong province have also been told not to open before Feb. 10.

The outbreak of coronavirus, which the World Health Organization declared a global health emergency, threatens to disrupt swathes of Chinese manufacturing.

The source said a halt beyond Feb. 10 could disrupt Foxconn's shipments, highlighting concerns about production hubs in the southern province of Guangdong and the city of Zhengzhou in Henan province where key iPhone plants are located.

"What we are worried about is delays for another week or even another month. The impact would be big," the source said. "It definitely will have an impact on the Apple production line."

"The tricky question is whether we will be able to resume production (on Feb. 10)...It's up to the instructions given by central and provincial governments."

The Guangdong Department of Labour and Social Security said in a response to a question from Reuters that no company including Foxconn can resume work before Feb. 9, with the exception of firms involved in making or providing medical supplies and other daily necessities.

HEALTH CONTROL

Foxconn has asked employees and clients in China's Hubei, the epicenter of the outbreak, not to return to factories and told workers to report their health condition to managers on a daily basis, an internal memo reviewed by Reuters shows.

The company also said employees who follow the rules will be paid as usual and those we fail to do so will be "severely" punished, although it did not elaborate.

A hotline was set up to encourage employees to report those who had broken the rules, with a monetary award of 200 yuan ($29), the note dated Feb. 1 said.

Morningstar analyst Don Yew sees "limited" impact on Foxconn's supply chain, saying its four subsidiaries in Hubei only accounted for 1.8% of the firm's overall revenue in 2018 and vendors such as Apple maintain a diversified supply chain.

However, a spread of the coronavirus to major smartphone manufacturing hubs such as Guangdong may lead them to revise financial estimates for companies including Foxconn, Yew said.

Exclusive: Outbreak to hit iPhone output if China extends Foxconn factory halt - source
 

Related Articles

Danone doubles supply of some baby formula to U.S.
Danone doubles supply of some baby formula to U.S. By Reuters - May 25, 2022

By Richa Naidu LONDON (Reuters) - Danone SA (OTC:DANOY) on Wednesday said it has been doubling shipments to the United States of Neocate formula for infants allergic to cow's...

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
or
Sign up with Email