Exclusive: Foxconn COVID woes could hit up to 30% of Zhengzhou factory’s November iPhone output
TAIPEI, Oct 31 (Reuters) – COVID-19 problems at Foxconn’s iPhone assembly plant in the Chinese city of Zhengzhou could cut production at the Apple Inc site by 30% (AAPL.O) in November , a person with direct knowledge of the matter said Monday.
Foxconn, formerly Hon Hai Precision Industry Co Ltd (2317.TW), is working to increase production at its Shenzhen city plant to make up for the shortfall, the person said, declining to be identified as the information was private.
The 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 at the site, with several workers fleeing the facility over the weekend. 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 the situation was under control and it would coordinate relief production with other factories to reduce the potential impact. Its stock price fell 1.9% on Monday against a 1.1% rise in the broader market (.TWII). Read more
Apple did not respond to a request for comment.
Foxconn is Apple’s biggest iPhone maker, producing 70% of iPhone shipments worldwide, which in turn accounts for 45% of the Taiwanese company’s revenue, Fubon analysts said this month. Research, based in Taipei.
It also builds the device in India and southern China, 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.
Foxconn and local authorities have not disclosed the number of infected workers at the site. Zhengzhou, capital of central Henan Province, has reported 264 locally transmitted COVID-19 cases since Oct. 19.
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 discovered despite setting up a closed-loop system. Read more
Reporting by Yimou Lee; Additional reporting by Brenda Goh; Editing by Gerry Doyle and Christopher Cushing
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