Apple’s supply chain tested in China as Covid hits iPhone assembler Foxconn
Foxconn, Apple’s main iPhone assembler, said it was preparing to move production to other parts of China as a large number of workers fled the main production center to escape the worsening COVID-19 outbreak.
On Monday, local officials from cities across the region continued buses Workers Far from the Zhengzhou plant, where employees say the company failed to provide adequate food and a safe work environment during Apple’s peak production period.
“With the current pandemic situation, doing well is a long-running war to keep more than 200,000 employees safe,” Foxconn said in a stock exchange statement Sunday evening. Shares of Hon Hai Precision Industry, the Taiwan-listed Foxconn company, fell 1.4 percent on Monday.
A spokesman for the local Foxconn factory told Chinese state media: “We are in peak production season at the moment, so we need a lot of assembly line workers… Our company is coordinating spare production capacity at other locations.”
The outbreak is a challenge for Apple, which has settled most of its supply chain in China, leaving the US tech group vulnerable to Beijing’s tough no-Covid strategy.
Local Chinese authorities on Sunday tasked Foxconn with helping employees go home and improve conditions at the factory after photos and videos of hundreds of workers leaving campuses on foot went viral on social media.
Two Foxconn workers quarantined in buildings surrounding the factory complex said their assembly lines were short of staff on Monday. “No one at my station said they were working,” said a Foxconn employee, who asked not to be named.
A third employee said he was debating whether to come to work on Monday night. “The pandemic scares me . . . but I need to make money,” he said, adding that assembly lines were already strained by a shortage of workers last week.
Ming-chi Kuo, an analyst at TF International Securities who focuses on Apple, estimated that the situation in Zhengzhou has affected “more than 10 percent of global iPhone production capacity”.
But Kue said the COVID-19 outbreak has not yet affected Apple’s iPhone shipment forecast for the current quarter. “Foxconn’s production capacity is expected to gradually improve within a few weeks, and there should be a limited impact on iPhone 4Q22 shipments,” he said.
Analysts at Morgan Stanley said they were monitoring the situation in the fourth “peak season for iPhone shipments.”
“Zhengzhou is one of Foxconn’s major production sites, especially for iPhone assembly,” they said in a report, noting that the factory complex accounts for about 60 percent of Foxconn’s iPhone assembly capacity.
Authorities have sealed off large swathes of Zhengzhou in an effort to control the city’s recent COVID-19 outbreak. The city of more than 10 million on Monday reported 40 new cases of COVID-19.
Foxconn and Apple did not immediately respond to requests for comment.
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