The world’s biggest electronics maker says it has recovered from COVID.
What happened: Foxconn posted record revenues in January and said that operations were back to normal after COVID-related disruptions and worker unrest hobbled the company last fall.
Why it matters: Foxconn is one of the most important electronics suppliers in the world, producing game consoles like the PlayStation 5 and assembling about 70% of Apple’s iPhones. Its recovery is a relief for the many electronics companies that depend on it to keep their supply chains humming.
- It’s also a positive sign for China’s economy, which is showing encouraging signs of bouncing back from years of difficult lockdowns.
- Its manufacturing sector expanded in January for the first time in four months, and consumer spending is picking up as people head back to malls and movie theatres.
Yes, but: China’s economy could still be laid low by its shaky real estate sector, which accounts for around a quarter of its economy.
- Government efforts to deflate a massive property bubble worked… maybe a bit too well: As of November, real estate developers making up 38% of the market had defaulted or were likely to, leaving buyers waiting for homes that may never get built.
- The government is now planning to ease some restrictions that triggered the real estate downturn. “The stakes are immensely high,” said economic historian Adam Tooze.
Zoom out: Foxconn’s fortunes reflect a surprisingly sunny global economic landscape. The Eurozone unexpectedly grew in Q4, and last week the IMF raised its 2023 growth outlook. Wall Street seems to think inflation has peaked. If China can get its housing situation under control, it could add another positive data point.