A person directly directly associated with the matter reported to Reuters on Monday, that the manufacturing of Apple’s iPhones could plummet down by nearly 30 per cent at the world’s largest iPhone production unit in China. The step will be taken owing to the strict COVID 19 curbs on China.
The main Zhengzhou plant in Central China, which has a strong workforce of 200,000 employees, has been jolted by dissatisfaction over rigorous measures to prevent the spread of COVID 19. Many workers have fled the site over the weekend. The stringent curbs can have an adverse impact on production as they come amid a conventionally engaging time for electronic makers ahead of the Christmas holiday season, which is also a prime time for sales for companies such as Apple.
Manufacturer Hon Hai Precision Industry, also known as Foxconn, is working towards multiplying production at another unit in Shenzhen city to cover up the deficit in production. On Monday, Foxconn’s share price closed down 1.4 per cent against a 1.3 per cent rise in the broader market.
On Sunday, the company mentioned that the situation was much stable now and that it would coordinate back up production with other manufacturing units in order to minimise the possible effects.
Apple has not commented anything on the matter so far.
What is Foxconn?
Producer of 70 per cent global iPhone shipments, Foxconn is Apple Inc’s biggest iPhone manufacturer. According to Taipei based Fubon Research conducted by analysts last month, the production of iPhones make up 45 per cent of the Taiwanese firm’s revenue. The firm also builds the device in India, but the Zhengzhou plant constitutes a larger proportion of its global output.
Another source (not willing to be named) told Reuters that many employees remained at the Zhengzhou unit and the production was steady.
China’s stringent Covid 19 policies
As per China’s rigid and firm protocols against the spread of COVID 19, localities must act in accordance to prevent the disease outbreaks, including implantation of full-blown lockdowns.
Thus, units in such areas are often allowed to function on the condition that they work under a “closed loop” system where employees work and live on-site. Such arrangements have caused various difficulties for the operating businesses.
On October 19, Foxconn prohibited dining at canteens at the Zhengzhou plant, and the employees were required to have meals in dormitories instead. The move provoked the employees to rant about their treatment on social media. Many left the site alleging pitiable working and living conditions.
Foxconn has not revealed whether any worker at the site contracted the deadly virus. However, the Chinese authorities have recorded 264 locally transmitted cases of the novel corona virus since October 19, in Zhengzhou, the capital of Central Henan province.
As cases in the southern city peaked, the company resorted to closed loop measures in March and July at its smaller factory at Shenzhen.