Covid Walkouts At Foxconn Plant Affect iPhone Production

Apple supplier Foxconn has said it is coordinating production with its plants across China amidst a Covid-19 outbreak in Zhengzhou that could affect production at its biggest iPhone facility during peak season.

Significant numbers of workers at the Zhengzhou plant have begun leaving as cases rise in the region, fearing lockdowns or outbreaks, according to local media reports.

Zhengzhou, capital of central Henan province, reported 167 locally transmitted Covid-19 cases in the seven days to 29 October, up from 97 in the prior seven-day period.

Worker departures

Foxconn did not confirm how many staff had left the Zhenzhou complex, which employs some 200,000 workers, but said on Sunday it would not stop workers from leaving.

The company said it is arranging point-to-point transportation to ferry workers back to their home towns in other cities in central China.

People on social media reported seeing Foxconn workers travelling to their hometowns on foot across fields in the daytime and on roads at night, after public transportation in Zhengzhou was suspended as part of Covid-19 controls.

The Zhengzhou plant is estimated to account for at least 10 percent of Foxconn’s iPhone production capacity and is sometimes referred to as “iPhone City”.

‘Protacted battle’

“We are very aware that under the current situation, it is a protracted battle,” Foxconn said in a statement.

The company said the situation was gradually coming under control and that it was coordinating back-up production capacity with other plants to reduce any potential impact.

Apple did not immediately respond to a request for comment on the production situation.

The situation at Foxconn’s Zhengzhou factory affects at least 10 percent of Apple’s global iPhone production capacity, Kuo Ming-chi, an analyst at TF International Securities who follows Apple’s supply chain, wrote on Twitter on Sunday.

Disruption

But he said the incident has not changed his current forecast for iPhone shipments, adding that he believes Foxconn’s production capacity “will gradually improve within a few weeks” with “limited impact” on iPhone shipments in the fourth quarter.

Apple’s production has been disrupted by China’s zero-Covid policies during the pandemic, which this year have resulted in a two-month lockdown in Shanghai and sporadic closures in other cities.

But while warning of possible effects of the disruption the company has nevertheless generated nearly $100 billion (£86bn) in profits over the past 12 months, including net profits of $20.7bn in the quarter ended 24 September.

Some $42bn of the company’s $90.1bn in revenues for the quarter were generated by iPhones, by far the company’s biggest source of income, followed by $19.2bn for services, $11.5bn in Mac sales and $9.6bn for wearables, the company said in its earnings report last week.