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Foxconn resumes production at the world’s largest iPhone factory




Hong Kong
CNN Business

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

The “epidemic situation” at the facility, known as iPhone City and often home to hundreds of thousands of workers, has been brought under control, the Taiwanese contract manufacturer said. in a statement in Monday.

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

Foxconn does not provide more details. Its CEO was quoted as telling Reuters that full production will continue between late December and early January.

The ongoing supply disruption at Foxconn’s campus in Zhengzhou City has cost Apple dearly 1 billion dollars a week in lost iPhone sales, Daniel Ives, an analyst at Wedbush Securities, told CNN Business. He estimates that Apple is short of 10 million to 15 million iPhones during the key holiday shopping season.

The trouble started in October when workers left campus because of concerns about working conditions and lack of food. Short of staff, bonuses were offered to returning workers.

But protests broke out last month when newly hired employees said management hadn’t kept their promises. The workers clashed with security officers, before the company finally gave them cash to give up and leave.

Analysts say production difficulties in iPhone City will accelerate the pace of Apple’s supply chain diversification away from China.

In recent weeks, according to The Wall Street JournalApple

(AAPL)
yes accelerated plans to move some production outside of China. It is said to be asking suppliers to plan more aggressively for Apple assembly

(AAPL)
other products in Asia, especially India and Vietnam.

Apple did not immediately respond to a request for comment.

“The move out of China will not be easy and comes with obvious logistical, technical and infrastructural barriers as the diversion is strong,” Ives wrote in a research note on Sunday. The move to India and Vietnam now starts with the Apple ecosystem on alert.

If Apple makes positive moves, more than 50% of iPhone production could come from India and Vietnam in fiscal year 2025/2026, compared to the current single-digit rate, he added.

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