TAIPEI, Oct. 31 (Reuters) – Production of Apple Inc’s (AAPL.O) iPhones could drop by as much as 30% next month at one of the world’s largest factories due to tightening of COVID-19 limits in China , a person with direct knowledge of the matter said Monday.
Manufacturer Foxconn, formally Hon Hai Precision Industry Co Ltd (2317.TW), is working to ramp up production at another factory in Shenzhen city to make up for the shortage, said the person, who declined to be identified because the information was private.
The main factory in Zhengzhou in central China, which employs about 200,000 people, has been rocked by dissatisfaction with strict measures to contain the spread of COVID-19, with several workers fleeing the site over the weekend. read more
The potential impact on manufacturing comes amid a traditionally busy time for electronics manufacturers leading up to the year-end season, which is also a peak time for suppliers like Apple.
Foxconn said Sunday it would bring the situation under control and coordinate backup production with other factories to mitigate the potential impact. The share price closed 1.4% lower on Monday against a 1.3% gain in the broader market (.TWII). read more
Apple did not respond to a request for comment.
Foxconn is Apple’s largest iPhone maker, producing 70% of iPhone shipments worldwide, which in turn makes up 45% of the Taiwanese company’s sales, analysts at Fubon Research in Taipei said this month.
It also builds the device in India, but the Zhengzhou plant assembles most of its global production.
A second person familiar with the situation said many workers at the Zhengzhou factory were left behind and production continued.
STRICT COVID-19 MEASURES
China’s ultra-strict zero-COVID-19 policy requires municipalities to act quickly to contain outbreaks, with measures such as full lockdowns.
Factories in affected areas are often allowed to remain open provided they operate on a “closed loop” system with staff living and working on site. Companies have said that such arrangements pose a host of problems.
Foxconn banned dining in canteens at the factory in Zhengzhou on Oct. 19 and forced workers to eat meals in dormitories. It said production was normal.
The measures led people who said they worked on the site to express their frustration with their treatment and facilities via social media.
Scores fled the site over the weekend, with photos and videos on social media claiming to show Foxconn employees trekking across fields during the day and along roads at night. Reuters was unable to immediately verify the authenticity of the messages. read more
Foxconn has not disclosed whether employees at the Zhengzhou site have been diagnosed with COVID-19. Authorities have reported 264 locally transmitted COVID-19 cases in Zhengzhou, the capital of central Henan province, since Oct. 19.
Foxconn implemented closed loop measures at its smaller factory in Shenzhen in March and July this year, while cases rose in the southern city.
In May, the Shanghai factory of another Apple supplier, MacBook assembler Quanta Computer Inc (2382.TW), was also hit by chaos among workers after the discovery of COVID-19 cases, despite a closed system being put in place. . read more
(This story has been resubmitted to correct the headline and clarify that the figure applies to the output in a single plant)
Reporting by Yimou Lee; Additional reporting by Brenda Goh; Editing by Gerry Doyle and Christopher Cushing
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