Foxconn, or Hon Hai Technology Group, on November 10, confirmed that it is increasing its production capacity in China despite the recent chaos in its Zhengzhou plant.
As Bloomberg reported, Chairman Young Liu said the company plans to increase capital spending next year, and China would continue to receive most of that investment.
Foxconn’s Zhengzhou plant has been in disarray as it tried to contain a COVID flare-up that meets China’s zero-dynamic strategy. Reuters reported that the output of Apple iPhones could falter by 30% this month due to the turmoil. Apple has also warned that shipments of iPhone 14 Pro and iPhone 14 Pro Max could be delayed.
According to the Financial Times, Chairman Yong Liu said the turmoil was a crisis created by the pandemic. He admitted that meeting China’s pandemic curbs was a challenge but believed rivals face the same hurdles. However, Liu added that he hoped Beijing would lessen the measures when the virus’s lethality decreased.
Liu, however, said that the “zero-COVID” policy would be a reason to diversify the production base outside of China. Instead, he suggested relocation may happen due to other reasons, such as geopolitics.
According to Bloomberg, Liu said the outbreak in Zhengzhou means Foxconn has the most expertise in dealing with a local flare-up.
Meanwhile, the group’s gross margin decreased from 6.4% in the three months before the third quarter to 6.16%. Liu hoped to raise it to 10% eventually. According to the Financial Times, its net profit for the September quarter was around $1.2 billion, a 5% year-on-year rise. Still, it was below experts’ projections of nearly $1.3 billion.
Foxconn has predicted stagnant revenue in the current quarter and the next three months of 2023.