Hon Hai Precision Industry Co., better known as Foxconn, the world’s largest contract manufacturer, surprised many on Tuesday when they announced they were raising their outlook for the quarter and for the year based on what they say is improving supply chain stability in China. The company is one of the largest suppliers for many companies, including Apple, Inc.
See more on what Foxconn is seeing in the supply chain
Foxconn reported revenues of 486.46 billion New Taiwan dollars ($16.76 billion) in April, a drop of 4.1% from the previous month. However, other Apple suppliers including Pegatron (iPhone assembler) and Quanta Computer (MacBook manufacturer) saw revenues slide 35% and 40% respectively in the same monthly comparison due to the Shanghai lockdowns, according to a report in the Nikkei.
It’s notable that Foxconn is contracted by a wide range of clients beyond Apple, including Google, Facebook, HP, and Dell. The Taiwanese company maintains no fewer than 30 factories in China, making that country its most important manufacturing center.
Company Upbeat on Results
Company chairman Young Liu was upbeat in describing what the company is currently seeing.
“The overall lockdown impact on Foxconn is rather limited. You can tell from our revenues in April, and May’s performance is also better than we estimated,” Liu said, in reference to strict COVID containment measures imposed in and around Shanghai.
“We previously forecast this year we would maintain a similar level from last year, after factoring in inflation, war [in Ukraine], and other uncertainties, but now we think the full year will be better than our estimate,” Liu added.
How Has Foxconn Been Able to Outperform Others?
So why has Foxconn been able to perform better than others? During the current COVID outbreak in China, the company has been able to – with government approval – operate under what’s known as closed-loop measures. This system of managing essentially has employees live on the factory compound and restricts their movements in and out of the factories and dormitories in a bid to prevent the spread of COVID infections.
As a result of this process, while others may have been closed down, Foxconn continued to operate almost normally. The company further said that product development was continuing and new product introductions would be “proceeding as normal.”
COVID Issues Expected to Continue; Looks to Advance Closed-Loop System
Foxconn says that it will continue to monitor COVID closely in China. It will also study ways to further improve its closed-loop operational process for even better results, as they believe the risk of supply chain issues continues. Their goal is to eliminate any disruption to their production.
“We think such COVID controls will continue to happen, and it is our operation focus to make sure the facilities can keep operating,” Liu said.
See more on Foxconn by visiting: foxconn.com.