Michael Pillsbury, director of China strategy at the Hudson Institute, examines reports of Apple moving production out of China on Fox Business Tonight.
Apple Inc.’s iPhone production is still hampered by COVID-19 issues in China, but production is beginning to meet demand for the more expensive Pro models, according to analysts and people involved in the supply chain.
Models like the iPhone 14 Pro Max, which starts at around $1,100, are an integral part of Apple’s strategy to boost revenue as growth in the global smartphone market slows. That strategy took a hit in October when the COVID-19 outbreak hit the main manufacturing base for iPhone Pro models run by Foxconn Technology Group in the central Chinese city of Zhengzhou.
Initially, workers in Zhengzhou only had to travel between their workplaces and their dormitories due to China’s strict anti-COVID measures. The near-lockdown led to some workers fleeing and others to clash with police, disrupting production.
Security officers in protective clothing attack a man during a protest at a factory complex run by Foxconn Technology Group, which runs the world’s largest Apple iPhone factory, in Zhengzhou, central China’s Henan province, on November 23, 2022. (AP Photo/AP Newsroom)
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Now that China has lifted most of its COVID control measures, a major concern in factories across the country is worker health. At least tens of millions of Chinese people across the country are believed to be infected with the coronavirus.
It’s unclear what percentage of Foxconn workers in Zhengzhou have caught it, but workers there say they know many people around them who have developed fever or other symptoms of COVID-19. Workers said some of the injured continued to work while others rested. They say it’s hard to know who actually has COVID-19 because the country has halted widespread testing and test kits are in short supply.
| Ticker | Security | The last one | Change | Change % |
|---|---|---|---|---|
| AAPL | APPLE INC. | 126.04 | -3.99 | -3.07% |
APPLE TO MOVE IPHONE PRODUCTION FROM CHINA BECAUSE OF VIOLENT LABOR PROTEST: REPORT
Fears that further unrest in China could affect Apple production and the country’s New Year sales helped push Apple shares down 3.07 percent to $126.04 on Wednesday, the lowest since June 2021.
Still, analysts and people involved in the supply chain say the situation in China, while far from normal, is at least better than it was during the Foxconn workers’ strike in November.
“Supply is improving and slowly catching up with demand,” JP Morgan analyst Samik Chatterjee wrote in a note to investors about the iPhone 14 Pro this week.
Wait times for US consumers to order iPhone Pro models, which once stretched to 40 days, have improved, according to JP Morgan.
In the U.S. and China, Apple’s websites show wait times of one to two weeks for Pro models. Some Pro models and colors are available immediately at select Apple Stores in both countries.
A worker wearing personal protective equipment disinfects a factory at the Foxconn Industrial Park in Zhengzhou, Henan Province, China, on November 6, 2022. (VCG/VCG via Getty Images/Getty Images)
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On Dec. 8, Foxconn, the sole assembler of Apple’s high-end iPhone models, said it had ended restrictions on movement at its plant in Zhengzhou after more than 50 days.
According to analysts and people involved in the supply chain, parts of the factory that make iPhones have recovered slightly and are operating at about 70% capacity. Still, Foxconn is struggling to restore full normalcy, they said.
Taiwan-based research firm TrendForce said labor shortages are affecting supply chains in China. It forecast iPhone shipments totaling 47 million units in the January-March quarter, down 22 percent from a year ago and down from a previous forecast of 56 million units issued in late October. The numbers include all iPhone models.
This week, Foxconn offered a bonus worth about $700 to key production workers willing to stay on the line until March 20. This is different from the usual fall, when Foxconn ramps up its workforce in the summer to meet demand for vacations. pulls back after the shopping season is over.
Production at Foxconn’s site in Zhengzhou, China, the world’s largest iPhone factory, has been halted by protests, quarantines and worker walkouts.
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The Zhengzhou factory, sometimes called “iPhone City,” employs about 300,000 workers at peak times to produce iPhones and other Apple products. At one point, the city alone accounted for nearly 85 percent of the Pro line of iPhones, according to market research firm Counterpoint Research.
Formerly Hon Hai Precision Industry Co. Foxconn, known as Foxconn, has moved part of its iPhone production to other factories in the southern city of Shenzhen.
Regardless of short-term production ups and downs, people involved in the supply chain see Apple diversifying its supply chain to more places outside of China, such as India and Vietnam, in the medium to long term. they say that the rib is coming out. The past year has highlighted the political and business risks of concentrating too much manufacturing in China.
Foxconn assembles iPhones in India and has recently expanded its technology, so it can start manufacturing some new iPhone models in India at the same time as the Chinese factories.
Aaron Tilley contributed to this article.
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