Apple warns customers of longer wait times for iPhones as the holiday season approaches, after Covid restrictions in central China “temporarily impacted” production at the world’s largest factory that makes smartphones.
The US tech giant has had to contend with more than a month of chaos at its main assembler Foxconn’s mega factory in Zhengzhou, China, known as “iPhone City”, following a Covid-19 outbreak that started in October.
Foxconn, Apple’s main subcontractor, last month closed its giant factory in Zhengzhou following a surge in infections, in line with China’s zero-Covid policy. About 23 days for customers to buy high-end iPhones in the US, according to research by Swiss bank USB.
The Taiwanese firm said its fourth-quarter earnings this year would take a hit from the coronavirus lockdowns.
Panicked workers fled the scene last week on foot following allegations of poor conditions at a facility that employs hundreds of thousands of workers.
“Covid-19 restrictions have temporarily affected the main iPhone 14 Pro and iPhone 14 Pro Max assembly facility in Zhengzhou, China,” California-based Apple said in a statement.
The Chinese government’s withdrawal of its zero-covid policy has increased the risk of a prolonged labor shortage at parts and assembly factories across the country.
“Normally, almost all iPhone production is done in Zhengzhou,” Ivan Lam, an analyst at specialist firm Counterpoint, told AFP.
The company said it was initially “cautiously optimistic” about its fourth-quarter results.
“However, as the pandemic has affected some of its Zhengzhou operations, the company will ‘downgrade’ its outlook for the fourth quarter,” he said in a Foxconn statement.
“Foxconn is currently working with the government to (a) eradicate the pandemic and resume production at full capacity as soon as possible,” the company said. It did not give any statistical projection for how badly it expected earnings to be hit.
“This is a dark sign of the zero-Covid policy in China impacting production for Apple with Foxconn,” Dan Ives, analyst at Wedbush Securities, told AFP.
Apple’s most important Taiwanese suppliers including Foxconn, Pegatron and Winstron have responded by seeking to expand their nascent Indian operations.
Prabhu Ram, head of industry intelligence group at CyberMedia Reasearch in Gurgaon, India, estimated that upwards of 7-8 percent of iPhones are being assembled in India, and predicted the big three Taiwanese suppliers were targeting 18 percent of iPhones assembly to be in India by 2024.
“At present, China is still facing the dual threat of imported infections and the spread of domestic outbreaks,” Mi said at a press briefing.
“The disease control situation is as grim and complex as ever,” he said. “We must continue to put people and lives first”.