TAIPEI, Oct 31 (Reuters) – Production of Apple Inc. (AAPL.O) iPhones could plummet by up to 30% at one of the world’s biggest factories next month due to tightening COVID-19 restrictions in China, a person with direct knowledge of the matter said on Monday.
Manufacturer Foxconn, formerly Hon Hai Precision Industry Co Ltd (2317.TW)is working to increase production at another plant in Shenzhen city to make up for the shortfall, the person said, declining to be identified as the information was private.
Its main factory in Zhengzhou, central China, which employs around 200,000 people, has been rocked by dissatisfaction with strict measures to curb the spread of COVID-19, with several workers fleeing the site over the weekend. -end. Read more
The possible impact on production comes during a traditionally busy period for electronics manufacturers ahead of the holiday season, which is also a prime time for vendors such as Apple.
Foxconn said Sunday it was under control and would coordinate relief production with other factories to reduce any potential impact. Its share price closed down 1.4% on Monday against a 1.3% rise 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 accounts for 45% of the Taiwanese company’s revenue, analysts at Fubon Research, based in Taipei.
It also builds the device in India, but its Zhengzhou factory assembles the majority of its global production.
A second person familiar with the situation said many workers remained at the Zhengzhou plant and production continued.
STRICT MEASURES AGAINST COVID-19
Under China’s ultra-strict zero-COVID-19 policies, localities must act quickly to quell outbreaks, with measures including large-scale lockdowns.
Factories in affected areas are often allowed to remain open provided they operate on a “closed loop” system where staff live and work on site. The companies said such arrangements pose many challenges.
Foxconn on October 19 banned meals in canteens at the Zhengzhou plant and forced workers to eat in dormitories. He said the production was normal.
The measures have led people who said they work on the site to express their frustration about their treatment and arrangements via social media.
Dozens of people fled the site over the weekend, with photographs and videos on social media purporting to show Foxconn staff walking through fields by day and along roads by night. Reuters could not immediately verify the authenticity of the messages. Read more
Foxconn did not disclose whether any workers at the Zhengzhou site had been diagnosed with COVID-19. Since Oct. 19, authorities have reported 264 locally transmitted COVID-19 cases in Zhengzhou, the capital of central Henan Province.
Foxconn implemented closed-loop measures in March and July this year at its small factory in Shenzhen as cases surged in the southern city.
In May, the Shanghai factory of another Apple supplier, MacBook maker Quanta Computer Inc. (2382.TW)was also hit by worker chaos after COVID-19 cases were found despite having a closed-loop system in place. Read more
(This story has been reclassified to correct the headline clarifying that the figure applies to single plant production)
Reporting by Yimou Lee; Additional reporting by Brenda Goh; Editing by Gerry Doyle and Christopher Cushing
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