Hon Hai Precision Industry Co (鴻海精密) cut its revenue outlook for this year after deciding to impose strict quarantines at its main base for making iPhones, a measure to guard against the 2019 novel coronavirus outbreak that might hurt Apple Inc.
Hon Hai, which makes the vast majority of the world’s iPhones in Zhengzhou, China, officially resumes production on Monday next week after an extended Lunar New Year holiday.
However, workers returning from outside Henan Province — the site of its main factory — would be quarantined for 14 days, the company said in a statement, adding that any staff reporting to work who reside within the province would be isolated for seven days.
Photo: David Chang, EPA-EFE
The lost production prompted Hon Hai to slash its revenue growth forecast for this year.
The company is projecting a revenue increase of 1 to 3 percent this year, chairman Young Liu (劉揚偉) told Bloomberg News in a text message.
That is down from a Jan. 22 forecast of 3 to 5 percent growth — before the outbreak spread beyond China — and lags behind the 5.4 percent average of analysts’ projections.
“Given current market conditions, we are lowering to between 1 percent and 3 percent,” Liu said, when asked whether Hon Hai would cut its sales growth forecast for this year.
On Tuesday, Hon Hai said that it still expects to restart facilities throughout China on schedule next week, but it could take one to two weeks from then to resume full production due to the outbreak, a person with direct knowledge of the matter said.
The company has filed requests to reopen factories with Chinese authorities, the source said.
A full resumption is not possible until late this month because of various travel restrictions imposed to curb the virus, the source added.
“Roads are closed in some parts of the country. Nobody knows for sure if some workers could get back in time,” said the source, who described a “chaotic” situation in the company’s top management as it scrambles to meet different requirements for the resumption of operations set by various local governments across China.
“A full resumption will take at least one to two weeks from Feb. 10,” the person said.
The factory halt is set to hit Hon Hai’s profit for this year, but it was still evaluating the likely impact, the person said.
“Profit is definitely going to be hit, but as to how big the impact will be, we’re still calculating,” the person added.
Hon Hai, the world’s largest contract electronics manufacturer, is making plans to ensure the health and safety of its hundreds of thousands of workers, including scanning a QR code on employees’ mobile phones for health screening.
The company expects to use local workers as much as possible, while allowing time off for those who cannot travel long distances to get back to work, an internal document showed.
Hon Hai’s factories are dependent to a great extent on migrant workers from poorer regions.
“We will be very glad if the return rate could hit 30 percent [on Monday],” the source said.
Additional reporting by Reuters
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