Foxconn, the world’s largest maker of Apple’s devices, reported a revenue of $48 billion for the March quarter, which is up by less than 4%. This increase underscores how fears of a recession are crimping demand for iPhones and other consumer electronics. However, this is down steeply even from the previous three months when a covid outbreak prompted protests at its main Zhengzhou facility in central China, disrupting iPhone production for weeks. The complex, known as “iPhone City,” resumed normal operations only in January. Investors are struggling to gauge how the popularity of iPhones and mobile devices will hold up this year. Foxconn also said that it expects a decrease in business in the second quarter on a year-over-year and quarterly basis.
Xiaomi’s smartphone shipments dived 26% in the fourth quarter after consumers worldwide put off spending on items such as electronics during a period of soaring inflation. Manufacturers such as Foxconn, which also makes iPads and gadgets for many of the world’s biggest brands, are now re-examining an electronics supply chain centered on China. The Taiwanese firm plans to invest about $700m in a new plant in India to ramp up production there, as more manufacturers shift from China to reduce fallout from growing Washington-Beijing tensions.
Meanwhile, Terry Gou, the billionaire founder of Foxconn, has said he would seek the presidential nomination for Taiwan’s main opposition party, the Kuomintang (KMT), for a second time. Mr. Gou stepped down as Foxconn chief in 2019 and made a presidential bid that year but dropped out after he failed to win the nomination for the KMT, which traditionally favors close ties with China. Speaking to reporters at a hotel next to Taiwan’s main international airport at Taoyuan on his return from a week-long trip to the US, Mr. Gou said the only way to avoid war with China was to reduce Sino-US tensions and get Taiwan’s ruling Democratic Progressive Party (DPP) out of office. “Peace is not taken for granted, and people need to make the correct choice,” added Mr. Gou, who did not take questions.
He made his announcement the same day Taiwan President Tsai Ing-wen is due to meet US House Speaker Kevin McCarthy in Los Angeles, a meeting China has threatened to respond to with unspecified retaliation. The KMT is in the process of choosing its candidate for the next presidential election, in January 2024, with Hou Yu-ih, mayor of New Taipei City, broadly considered the current favorite. The run-up to the election is taking place at a time of increased tensions between Taipei and Beijing, as China stages regular military exercises near the island to assert its sovereignty claims.
The KMT denies being pro-Beijing, though it supports maintaining good relations with China. The DPP champions Taiwan’s separate identity from China, but the government it leads has repeatedly offered talks with China that have been rebuffed. Foxconn is also looking to expand its operations in Vietnam, Mexico, and the United States, as it seeks to diversify its manufacturing sites globally. The company is planning to invest $1 billion in Vietnam and $10 billion in the United States.
The Taiwanese company has been under pressure to reduce its reliance on China, where it has most of its factories, amid rising labor costs and increased scrutiny from the U.S. government. The company has been forced to reassess its supply chain due to the ongoing trade war between the U.S. and China. The trade war has seen the U.S. impose tariffs on Chinese goods, including electronics, which has made it more expensive for companies such as Foxconn to manufacture their products in China.
In conclusion, Foxconn’s less than 4% increase in revenue for the March quarter highlights the impact of fears of a recession on demand for consumer electronics. The Taiwanese company is looking to expand its operations in India, Vietnam, Mexico, and the United States to reduce its reliance on China. Meanwhile, Terry Gou, the billionaire founder of Foxconn, has announced that he will seek the presidential nomination for Taiwan’s main opposition party, the Kuomintang (KMT), for a second time. The run-up to the election is taking place at a time of increased tensions between Taipei and Beijing, as China stages regular military exercises near the island to assert its sovereignty claims.