Foxconn workers at Taiwanese firm’s Zhengzhou, China factory, walked out over a pay dispute with the company. The Zhengzhou factory is estimated to account for more than 70% of Apple’s global assembly of iPhones.
Jakub Porzycki | Nurphoto | Getty Images
Foxconn, the world’s largest contract electronics maker, on Monday reported a sharp drop in November revenue after the company struggled with a Covid outbreak and worker unrest at the world’s biggest iPhone factory in China.
The Taiwanese firm, also known as Hon Hai Precision Industry Co, said that revenue last month totaled 551.1 billion new Taiwan dollars (about $18.05 billion), down more than 29% versus October and over 11% lower compared to November 2021.
Foxconn said the fall was due to “production gradually entering off-peak seasonality and a portion of shipments being impacted by the epidemic in Zhengzhou.” The company gave no further details.
Zhengzhou, a city in China, is home to the world’s largest iPhone assembly plant, which is run by Foxconn.
In late October, the Zhengzhou factory was hit with an outbreak of Covid and Foxconn battled to get it under control with measures such as testing and isolating workers who were infected, and effectively locking down the plant.
Last month, employees clashed with security personnel at the Zhengzhou plant and some workers took to social media to air their grievances over what appeared to be a delay in bonus payments. Foxconn later apologized for a “technical error” which caused the issues with workers’ pay.
In a bid to entice workers back to the factory, Foxconn announced a round of bonuses last month.
Foxconn did not address the rare worker unrest in its November revenue update but said the Covid outbreak was under control.
“At present, the overall epidemic situation has been brought under control with November being the most affected period by the epidemic,” the company said.
“In addition to reallocating production capacity of different factories, we have also started to recruit new employees, and are gradually moving toward the direction of restoring production capacity to normal. The outlook for the fourth quarter is expected to be roughly in line with market consensus,” it added.
Investors will now be watching for any impact on Apple, given its reliance on the Zhengzhou factory for global iPhone production.
Analysts at Evercore ISI said the issues at Foxconn could affect the production of between 5 million and 8 iPhone units in the December quarter, mostly at the high-end of Apple’s smartphone range.
This could negatively impact Apple’s revenue by $5 billion to $8 billion, the advisory firm added.
Correction: This story was updated to correct a conversion from new Taiwan dollars to U.S. dollars.
Alphabet Inc lost $100 billion in market value on Wednesday after its new chatbot shared inaccurate information in a promotional video and a company event failed to dazzle, feeding worries that the Google parent is losing ground to rival Microsoft Corp. Also Read – Google’s VP of labs, Salesforce’s former co-CEO to form AI company
Google has been on its heels after OpenAI, a startup Microsoft is backing with around $10 billion, introduced software in November that has wowed consumers and become a fixation in Silicon Valley circles for its surprisingly accurate and well-written answers to simple prompts.
Google’s live-streamed presentation on Wednesday morning did not include details about how and when it would integrate Bard into its core search function. A day earlier, Microsoft held an event touting that it had already released to the public a version of its Bing search with ChatGPT functions integrated.
Bard’s error was discovered just before the presentation by Google, based in Mountain View, California.
“While Google has been a leader in AI innovation over the last several years, they seemed to have fallen asleep on implementing this technology into their search product,” said Gil Luria, senior software analyst at D.A. Davidson. “Google has been scrambling over the last few weeks to catch up on Search and that caused the announcement yesterday (Tuesday) to be rushed and the embarrassing mess up of posting a wrong answer during their demo.”
Microsoft shares rose around 3 percent on Wednesday and were flat in post-market trading.
Alphabet posted a short GIF video of Bard in action via Twitter, promising it would help simplify complex topics, but it instead delivered an inaccurate answer.
In the advertisement, Bard is given the prompt: “What new discoveries from the James Webb Space Telescope (JWST) can I tell my 9-year-old about?” Bard responds with a number of answers, including one suggesting the JWST was used to take the very first pictures of a planet outside the Earth’s solar system, or exoplanets. The first pictures of exoplanets were, however, taken by the European Southern Observatory’s Very Large Telescope (VLT) in 2004, as confirmed by NASA.
Bard is an experimental conversational AI service, powered by LaMDA. Built using our large language models and drawing on information from the web, it’s a launchpad for curiosity and can help simplify complex topics → https://t.co/fSp531xKy3pic.twitter.com/JecHXVmt8l
“This highlights the importance of a rigorous testing process, something that we’re kicking off this week with our Trusted Tester program,” a Google spokesperson said. “We’ll combine external feedback with our own internal testing to make sure Bard’s responses meet a high bar for quality, safety and groundedness in real-world information.”
Alphabet is coming off a disappointing fourth quarter as advertisers cut spending.
The search and advertising giant is moving quickly to keep pace with OpenAI and rivals, reportedly bringing in founders Sergey Brin and Larry Page to accelerate its efforts.
“People are starting to question is Microsoft going to be a formidable competitor now against Google’s really bread-and-butter business,” said King Lip, chief strategist at Baker Avenue Wealth Management, which owns Alphabet and Microsoft shares.
Lip cautioned, though, that concerns about Alphabet may be overblown, saying: “I think still Bing is a far, far cry away from Google’s search capabilities.”
The new ChatGPT software has injected excitement into technology firms after tens of thousands of job cuts in recent weeks and executive pledges to pare back on so-called moonshot projects. AI has become a fixation for tech executives who have mentioned it as much as six times more often on recent earnings calls than in prior quarters, Reuters found.
The appeal of AI-driven search is that it could spit out results in plain language, rather than in a list of links, which could make browsing faster and more efficient. It remains unclear what impact that might have on targeted advertising, the backbone of search engines like Google.
Chatbot AI systems also carry risks for corporations because of inherent biases in their algorithms that can skew results, sexualize images or even plagiarise, as consumers testing the service have discovered. Microsoft, for instance, released a chatbot on Twitter in 2016 that quickly began generating racist content before being shut down. And an AI used by the news site CNET was found to produce factually incorrect or plagiarized stories.
At the time of writing, the Bard ad had been viewed on Twitter more than a million times.
Entertainment giant Disney is laying off 7,000 employees to cut costs, its CEO Bob Iger has announced. During the company’s earnings call for its December quarter, he said the move is “necessary to address the challenges we’re facing today”. Also Read – Zoom fires 1,300 employees, CEO takes 98 percent pay cut
Disney to lay off 7,000 employees
“I do not make this decision lightly. I have enormous respect and appreciation for the talent and dedication of our employees worldwide and I am mindful of the personal impact of these changes,” said Iger. Also Read – How to watch Black Panther: Wakanda Forever online
He said that under the strategic reorganisation, there will be three core business segments: Disney Entertainment, ESPN and Disney Parks, Experiences and Products.
“This reorganisation will result in a more cost-effective, coordinated and streamlined approach to our operations and we are committed to running our businesses more efficiently, especially in a challenging economic environment. In that regard, we are targeting $5.5 billion of cost savings across the company,” said the CEO.
The company’s streaming business lost around $1.5 billion last quarter.
Its current forecasts indicate Disney+ will hit profitability by the end of fiscal 2024.
Disney Plus added just 200,000 subscribers in the US and Canada for a total of 46.6 million, while its international offering (excluding HotStar) saw the addition of 1.2 million members.
Disney’s direct-to-consumer division, which includes its streaming services, saw a 13 percent increase in revenue to $5.3 billion, with an operating loss of nearly $1.1 billion.