Delays in production due to COVID-19 outbreak . . .
Apple announced this week that the recent COVID-19 outbreak at a Foxconn production facility, an electronics manufacturing contractor for Apple in Zhengzhou, China, will lead to shipping delays for the new iPhone 14 Pro and iPhone 14 Pro Max due to “severely reduced capacity” at the plant. The Zhengzhou factory is responsible for nearly 70 per cent of global iPhone production, and analysts have estimated that iPhone production will fall by approximately 10 per cent in the short term. The delay will almost certainly affect purchases made for the holiday season, though some close to the issue claim Foxconn plans to resume regular production by mid-to-late November.
Beijing maintaining strict COVID-19 restrictions . . .
Last weekend, tens of thousands of employees reportedly fled the Foxconn compound on foot to avoid catching the virus. The situation was exacerbated by Henan Province’s strict COVID-19 restrictions, which forced Foxconn to cancel dining hall meals and minimize worker movement in the compound to prevent the spread of infection. The company provided transport for all workers who chose to leave and increased daily bonuses for employees who chose to stay (to around C$75). However, the poor working conditions at the Zhengzhou plant have contributed to a labour shortage that has forced the company to undergo a recruitment drive at its Shenzhen factory, including increasing the hourly wage.
Apple reassessing its supply chain infrastructure . . .
With the drop in production at the Foxconn factory, Apple continues to reassess its supply chain infrastructure, including moving its production increasingly out of China and into other countries in the region, including India. Geopolitical tensions between Washington and Beijing have also contributed to the move, with Apple’s three biggest Taiwanese suppliers – Foxconn, Pegatron, and Wistron – increasing their iPhone production facilities in India. The reorganization of global supply chains may be easier said than done, as expansive logistics networks are already in place to support the Chinese factories. Similar networks would need to be developed in India to catch up with China’s production capacity.
- Deutsche Welle: Can India relieve Apple’s iPhone woes in China?
- Reuters: Output of Apple iPhones at major China plant could fall 30% amid COVID curbs
- South China Morning Post: Apple adds Pegatron as new iPhone 14 supplier in India in shift from China