Foxconn’s Profits Plunge By 90%
Factories in China shut down for weeks, sales down, still hoping for subsidy for Wisconsin operation.
Foxconn Technology Group, the Taiwan-based manufacturer with a still shadowy operation in Wisconsin, posted a 90 percent decline in its first quarter earnings for 2020, compared to the first quarter of 2019, as the Wall Street Journal has reported. The company’s net profit for the quarter was 2.08 billion (in new Taiwan dollars) compared to 19.83 billion in the first quarter of 2019. Much of that loss came because the company shut down its plants in China, where most of its business is located, due to the COVID-19 outbreak. It was the lowest quarter profits posted by the company in two decades, Reuters reported.
“The pandemic will continue to cast a shadow of uncertainty over the company,” the WSJ reported, “with April-June revenue expected to fall on year by a single-digit percentage, said Young-Way Liu, Foxconn’s chairman.” In a conference call Liu said “the visibility of our outlook for the whole year is limited” and “there is no way I can offer the outlook for the latter half of this year.”
Foxconn is the world’s electronics contract manufacturer, and most of its production sites have now returned to normal operation, Liu said. But its biggest customer is Apple, and demand for consumer products like smartphones is likely to decline in the current quarter, Liu noted. But the company “will stabilize in the second quarter,” Foxconn said in a statement, as Reuters noted.
“For consumer electronic products, because everyone is staying at home, naturally it affects consumers’ purchasing power and such power might take a very long time to recover,” Liu said.
Meanwhile, Foxconn’s much ballyhooed operation in Wisconsin remains mired in controversy, with all of its promised “innovation centers” in four different Wisconsin cities amounting to nothing more than empty buildings and continuing questions about its main campus in Mount Pleasant in Racine County, where there is little sign of activity and it remains unclear what will be manufactured there. The company has submitted documents to the State of Wisconsin stating it has hired 550 full-time employees and invested more than $280 million in capital expenditures to develop its Mount Pleasant campus, and is requesting a state subsidy worth nearly $45 million. But officials in the administration of Gov. Tony Evers have yet to certify that any subsidy was earned and have repeatedly informed the company it is out of compliance with the contract it signed with the state.
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