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Exclusive: Apple iPhones production at major factories in China could drop 30% due to Covid curbs

TAIPEI, Oct 31 (Reuters) – Production of Apple Inc’s ( AAPL.O ) iPhones could fall by as much as 30% at one of the world’s biggest factories next month due to tighter covid-19 curbs in China, a person with direct knowledge of the case said Monday.

Manufacturer Foxconn, formally Hon Hai Precision Industry Co Ltd ( 231[ads1]7.TW ), is working to increase production at another factory in Shenzhen city to make up for the shortage, the person said, declining to be identified as the information was private.

Its main Zhengzhou factory in central China, which employs around 200,000 people, has been rocked by discontent over strict measures to curb the spread of COVID-19, with several workers fleeing the site over the weekend. read more

The possible impact on production comes amid a traditionally busy time for electronics makers ahead of the year-end Christmas season, which is also a prime time for suppliers such as Apple.

Foxconn said Sunday it was bringing the situation under control and would coordinate backup production with other facilities to reduce potential impacts. The stock closed down 1.4% on Monday, against a 1.3% gain in the broader market (.TWII). read more

Apple did not respond to a request for comment.

Foxconn is Apple’s largest iPhone maker, producing 70% of iPhone shipments globally, which in turn account for 45% of the Taiwanese firm’s revenue, analysts at Taipei-based Fubon Research said this month.

It also builds the unit in India, but the Zhengzhou factory assembles most of the global production.

Another person familiar with the situation said many workers remained at the Zhengzhou plant and production was continuing.


Under China’s ultra-strict Zero COVID-19 policy, localities must act quickly to curb outbreaks, with measures including full-scale lockdowns.

Factories in affected areas are often allowed to remain open on the condition that they operate under a “closed loop” system where employees live and work on site. Companies have said that such arrangements pose a number of difficulties.

On October 19, Foxconn banned dining in canteens at its Zhengzhou plant and required workers to eat meals in dormitories. It said production was normal.

The measures led to people who said they worked at the site venting frustration about their treatment and supplies via social media.

Scores fled the site over the weekend, with photographs and videos on social media purporting to show Foxconn workers wandering across fields during the day and along roads at night. Reuters could not immediately confirm the authenticity of the posts. read more

Foxconn has not disclosed whether any workers at the Zhengzhou site had been diagnosed with COVID-19. Since October 19, authorities have reported 264 locally transmitted COVID-19 cases in Zhengzhou, the capital of central Henan province.

Foxconn implemented closed-loop measures in March and July this year at its smaller Shenzhen factory as cases in the southern city increased.

In May, the Shanghai plant of another Apple supplier, MacBook assembler Quanta Computer Inc ( 2382.TW ), was also hit by worker chaos after the discovery of COVID-19 cases despite a closed-loop system being put in place. read more

(This story has been re-filed to correct the headline clarifying that the figure refers to production at a single factory)

Reporting by Yimou Lee; Additional reporting by Brenda Goh; Editing by Gerry Doyle and Christopher Cushing

Our standards: Thomson Reuters Trust Principles.

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