Workers flee from China’s largest iPhone factory due to COVID-19 outbreak

New Delhi CNN Business – Foxconn, one of Apple’s biggest suppliers, is grappling with major disruption at its largest iPhone assembly plant in China, as anxious workers are reported to flee the closed facility, according to videos on social media.

A Taiwanese company is racing to control the outbreak of the COVID-19 virus on its campus in Zhengzhou, central China. On Wednesday, authorities imposed a seven-day shutdown of the area that houses the Foxconn plant, something that could affect the iPhone complex’s production and shipments.

Lockdown and exodus are putting enormous pressure on Foxconn just before the main holiday shopping season begins and highlight just how tough the country is. Zero covid policy It hurts international business.

“[We] I fully understand your eagerness to go home,” Foxconn told its employees over the weekend, according to a post on a Zhengzhou government official. WeChat account.

“For employees who voluntarily reside in the company’s factory area, the port government and the company will work together to ensure everyone’s health and safety,” she added.

Analysts said the chaos in Zhengzhou could jeopardize Apple and Foxconn production in the coming weeks. Evan Lamm, senior research analyst at Counterpoint, estimated that between 10% and 30% of iPhone 14 production could be affected in the near term if the situation does not stabilize.

The Zhengzhou campus is the world’s largest iPhone factory and typically accounts for up to 85% of iPhone assembly capacity, according to Lamm’s estimates.

A Foxconn spokesperson told Chinese state media that the company is trying to ramp up production at other locations.

“Right now, because now it’s peak production season… [there is] There is a high demand for workers, a Foxconn spokesperson told Henan Daily, adding that the company is “also coordinating spare production capacity at other sites.”

Foxconn and Apple did not respond to a request for comment from CNN.

Shares of Foxconn, also known as Hon Hai Precision Industry, fell 2.6 percent on Tuesday.

Videos of many people leaving Zhengzhou on foot have gone viral on Chinese social media in recent days. The city, which has a population of more than 12 million, imposed sweeping lockdown measures earlier last month after identifying dozens of Covid-19 cases.

State media said many Foxconn workers are among those who walk miles to flee the city. Calling it a “powerless move for some employees,” the Foxconn manager told Yicai media that workers were panicking about the virus spreading at the plant and not being able to access official information.

Foxconn said it is organizing cars for employees wishing to return home, according to a post on the Zhengzhou government. WeChat official account during the Weekend.

The company also quadrupled the daily bonus for factory workers this month, it said in a post on its official WeChat account Tuesday.

While these disruptions will affect iPhone production in the near term, analysts say they may not affect Apple’s iPhone shipments in the major holiday season.

“I think in one to two weeks, things will be back to normal, given the current situation,” Lam said.

“They still have a lot of alternative production sites,” he said, adding that Foxconn has already begun shifting production to other facilities in China, such as the southern province of Guangdong. “Things are under control now.”

And as Beijing shows few signs of moving away from strict Covid policies, Apple has begun to ramp up production in other countries, Including Indiato reduce its dependence on China.