Workers flee China’s largest iPhone factory over Covid outbreak

Workers flee China’s largest iPhone factory over Covid outbreak

By Diksha Madhok, Michelle Toh and the CNN Beijing Bureau

Foxconn, one of Apple’s largest suppliers, is dealing with a major outage at its largest iPhone assembly factory in China as anxious workers reportedly flee the shuttered facility, according to videos from social networks.

The Taiwanese company is racing to control a Covid outbreak at its campus in the central Chinese city of Zhengzhou.

The exodus is putting a lot of pressure on Foxconn just before the key Christmas shopping season kicks off and highlights how strict the country is zero policy-Covid it is hurting international business.

“[We] I fully understand your enthusiasm to return home,” Foxconn told employees over the weekend, according to a publication in the official Zhengzhou government daily. WeChat account.

“For employees who voluntarily stay in the company’s factory area, the port government and the company will jointly ensure everyone’s health and safety,” it added.

Analysts said the chaos in Zhengzhou could jeopardize production at Apple and Foxconn in coming weeks. Ivan Lam, senior research analyst at Counterpoint, estimated that 10% to 30% of iPhone 14 production could be affected in the short term if the situation does not stabilize.

The Zhengzhou campus is the world’s largest iPhone factory, typically accounting for up to 85% of iPhone assembly capacity, according to Lam’s estimates.

A Foxconn spokesman told Chinese state media that the company is trying to boost production elsewhere.

“Right now, because now is the peak production season… [there is] high demand for workers,” a Foxconn spokesman told the Henan Daily on Monday, adding that the company “was also coordinating backup production capacity at other sites.”

Foxconn and Apple did not respond to a CNN request for comment.

Shares of Foxconn, also known as Hon Hai Precision Industry, fell 2.6% on Tuesday.

Quadrupling Bonuses

Videos of many people leaving Zhengzhou on foot have gone viral on Chinese social media in recent days. The city, which has a population of more than 12 million, imposed sweeping lockdown measures early last month after identifying dozens of Covid-19 cases.

state media he has said that many Foxconn workers are among those who walk miles to escape the city. Calling it a “powerless move for some employees,” a Foxconn manager told news outlet Yicai that workers are panicking over the spread of the virus in the factory and a lack of access to official information.

Foxconn said it was arranging vehicles for employees who wanted to return home, according to a posting on the Zhengzhou government website. WeChat official account weekend.

The company has also quadrupled daily bonuses for plant workers this month, it said in a post on its official website. wechat account on Tuesday.

While these outages will affect iPhone production in the short term, analysts say they may not affect Apple’s iPhone shipments in the key holiday season.

“I think in a week or two, things will be back to normal, given the current state,” Lam said.

“They still have a lot of alternative production sites,” he said, adding that Foxconn had already begun to move production to other facilities in China, such as in the southern province of Guangdong. “Things are under control now.”

And, with Beijing showing few signs of backing away from its rigid Covid policies, Apple has started to push production in other countries. including indianto reduce its dependence on China.

The CNN Wire
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