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Foxconn restores production at world’s largest iPhone factory

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CNN Business

Apple supplier Foxconn says it is “gradually” restoring production capacity at its sprawling campus in central China, which has been hit by Covid-19 restrictions and worker protests since October.

The “epidemic situation” at the factory, known as iPhone City and normally home to hundreds of thousands of workers, has been brought under control, the Taiwanese subcontractor said in a statement on Monday.

“We have also started hiring new employees and are gradually moving towards restoring production capacity to normal,” he said, adding that the outlook for the fourth quarter should be in line with market consensus. .

Foxconn did not provide more details. Its executives reportedly told Reuters that full production would resume between late December and early January.

Ongoing supply disruptions at the Foxconn campus in Zhengzhou city were costing Apple about $1 billion a week in lost iPhone sales, Wedbush Securities analyst Daniel Ives told CNN Business. He estimates that Apple is missing between 10 and 15 million iPhones during the holiday shopping season.

The unrest began in October when workers walked off campus over concerns about working conditions and food shortages. Short-staffed, bonuses were offered to workers to return.

But protests erupted last month when newly hired employees said management had reneged on promises. The workers clashed with security guards, before the company finally offered them money to quit and leave.

Analysts said iPhone City production issues will accelerate the pace of Apple’s supply chain diversification outside of China.

In recent weeks, according to the Wall Street Journal, Apple (AAPL) has has accelerated its plans to transfer part of its production out of China. He reportedly told suppliers to more actively plan the assembly of Apple products (AAPL) elsewhere in Asia, particularly India and Vietnam.

Apple did not immediately respond to a request for comment.

“China’s departure will not be easy and will come with clear logistical, engineering and infrastructure hurdles, as the aggressive move to India and Vietnam now begins with the alert of the ‘Apple ecosystem,’ Ives wrote in a research report on Sunday.

If Apple acts aggressively, more than 50% of iPhone production could come from India and Vietnam by FY 2025/2026, up from the current single-digit percentage, he added. .

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