Apple’s Foxconn iPhone nightmare
Zero-Covid protests in Zhengzhou slow down production of flagship smartphones ahead of Christmas rush
Shipments of the latest Apple iPhones could be reduced in the run-up to Christmas as manufacturer Foxconn struggles to tackle worker unrest at its biggest production facility in China.
The Taiwanese technology giant “shut off” its primary plant in Zhengzhou in mid-October as “Covid cases spiked” in the region, said Tech Wire Asia. Around 200,000 staff were “walled” inside the facility’s grounds as “mounting worker discontent” saw employees “flee the enclosed factory campus”.
“Short on staff”, Foxconn offered workers bonuses to return to Zhengzhou, said CNN Business. But protests have since broken out and workers have clashed with security forces as “newly hired staff said management had reneged on their promises”. Employees “were eventually offered cash to quit and leave”.
Subscribe to The Week
Escape your echo chamber. Get the facts behind the news, plus analysis from multiple perspectives.
Sign up for The Week's Free Newsletters
From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.
From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.
‘Tumult in iPhone city’
“In China, Apple’s meteoric rise has a lot to do with its partnership with the world’s biggest contract assembler of smartphones”, Foxconn, said Tech Wire Asia. “The vast majority of iPhone 14 Pro and Pro Max devices, Apple’s most in-demand handsets this year”, are produced at the Zhengzhou campus, said Bloomberg.
Apple is now facing a “huge problem”, said CNN Business. China’s zero-Covid policy “has posed big challenges for the running of Foxconn’s Zhengzhou plant”, said the Financial Times, and the recent unrest “will heighten investor concerns about supply chain risk at Apple”. The newspaper noted that more than 95% of all iPhones are produced in China.
Daniel Ives, managing director of equity research at Wedbush Securities, told CNN Business that the “production shutdown” at Foxconn’s “sprawling” Zhengzhou campus was an “albatross” for Apple.
Demand for the latest iPhone models during the Black Friday shopping period was “much higher than supply”, Ives warned. “Every week of this shutdown and unrest we estimate is costing Apple roughly $1bn a week in lost iPhone sales,” he continued.
“The highly visible and unusual protests in Zhengzhou aggravated an already challenging business environment,” said Bloomberg. “The tumult in iPhone city” comes as a “stark reminder of the risks for Apple of its vast supply chain in China”, said Bloomberg.
Supply chain diversification
As long as China maintains its zero-Covid policy, “there will be huge impact on Foxconn and Apple”, said Tech Wire Asia. The manufacturer was “once an operational strength that afforded Apple the flexibility to have legions of workers crank out iPhones to meet global demand”. Now, “reliance on China has become a liability”.
“Much will depend on how quickly” Foxconn can get its production lines back up and running, said Bloomberg. If Covid restrictions including lockdowns continue, there could be further delays to production.
Analysts believe “the woes” Apple is facing will “speed up the pace of diversification away from China to countries like India”, said CNN. The company announced in September that it had begun iPhone production in India, “a major change in its strategy” as US companies looked for “alternatives to China, the world’s factory for decades”, CNN continued.
At present, the “only” sign of clarity is that Apple is warning visitors to its China website that some customers may need to wait until January for deliveries of the latest models, said Tech Wire Asia. Christmas and New Year is “expected to be a rather muted one for Apple”.
Sign up for Today's Best Articles in your inbox
A free daily email with the biggest news stories of the day – and the best features from TheWeek.com
Julia O'Driscoll is the engagement editor. She covers UK and world news, as well as writing lifestyle and travel features. She regularly appears on “The Week Unwrapped” podcast, and hosted The Week's short-form documentary podcast, “The Overview”. Julia was previously the content and social media editor at sustainability consultancy Eco-Age, where she interviewed prominent voices in sustainable fashion and climate movements. She has a master's in liberal arts from Bristol University, and spent a year studying at Charles University in Prague.
-
Big Tech critic Brendan Carr is Trump's FCC pick
In the Spotlight The next FCC commissioner wants to end content moderation practices on social media sites
By David Faris Published
-
ATACMS, the long-range American missiles being fired by Ukraine
The Explainer President Joe Biden has authorized their use for the first time in the war
By Justin Klawans, The Week US Published
-
The bacterial consequences of hurricanes
Under the radar Floodwaters are microbial hotbeds
By Devika Rao, The Week US Published
-
DOJ seeks breakup of Google, Chrome
Speed Read The Justice Department aims to force Google to sell off Chrome and make other changes to rectify its illegal search monopoly
By Peter Weber, The Week US Published
-
What Trump's win could mean for Big Tech
Talking Points The tech industry is bracing itself for Trump's second administration
By Theara Coleman, The Week US Published
-
Google Maps gets an AI upgrade to compete with Apple
Under the Radar The Google-owned Waze, a navigation app, will be getting similar upgrades
By Justin Klawans, The Week US Published
-
Social media ban: will Australia's new age-based rules actually work?
Talking Point PM Anthony Albanese's world-first proposal would bar children under 16 even if they have parental consent, but experts warn that plan would be ineffective and potentially exacerbate dangers
By Harriet Marsden, The Week UK Published
-
Is ChatGPT's new search engine OpenAI's Google 'killer'?
Talking Point There's a new AI-backed search engine in town. But can it stand up to Google's decades-long hold on internet searches?
By Theara Coleman, The Week US Published
-
Is the world ready for Tesla's new domestic robots?
Talking Points The debut of Elon Musk's long-promised "Optimus" at a Tesla event last week has renewed debate over the role — and feasibility — of commercial automatons
By Rafi Schwartz, The Week US Published
-
How will the introduction of AI change Apple's iPhone?
Today's Big Question 'Apple Intelligence' is set to be introduced on the iPhone 16 as part of iOS 18
By Justin Klawans, The Week US Published
-
FDA OKs Apple AirPods as OTC hearing aids
Speed read The approved software will turn Apple's AirPods Pro 2 headphones into over-the-counter hearing aids
By Peter Weber, The Week US Published