The lockdown of Foxconn's huge iPhone factory zone 'iPhone City' where a large-scale protest demonstration occurred is finally lifted, China is the biggest risk for Apple


by Prachatai

In Zhengzhou City, Henan Province, China, which is also called 'iPhone City' because of the concentration of iPhone manufacturing factories, the lockdown has been lifted to prevent the spread of new coronavirus infection. Large-scale protests have occurred during the lockdown period, and it is also reported that the production capacity of the iPhone has decreased significantly.

China's Zhengzhou, home to world's largest iPhone factory, ends Covid lockdown | CNN Business
https://edition.cnn.com/2022/11/30/tech/china-apple-foxconn-zhengzhou-lifts-lockdown-hnk-intl/

Zhengzhou Municipal Epidemic Prevention and Control Department General Citizen Public Information
https://mp.weixin.qq.com/s/AlHK3niz_wvD_CgHzDP_wQ

The total iPhone 14 Pro and 14 Pro Max shipments in 4Q22 will be 15–20 million units less than expected. Significant downside risks to Apple & iPhone supply chain due to Zhengzhou iPhone plant labor protests | by Ming-Chi Kuo | Nov , 2022 | Medium
https://medium.com/@mingchikuo/b7c446d04607

Analysis: Apple supply chain data shows receding exposure to China as risks mount | Reuters
https://www.reuters.com/technology/apple-supply-chain-data-shows-receding-exposure-china-risks-mount-2022-11-30/

In China, as a measure to prevent the spread of the new coronavirus, we are promoting a 'zero corona policy' that locks down facilities and areas where infection has been confirmed. Lockdown will start on November 2, 2022 in the Zhengzhou Airport Economic Zone, where the factory of Foxconn, which manufactures iPhones from Apple, is located. After that, as the infection spread, the lockdown extended to the entire city of Zhengzhou. During the lockdown, Foxconn's factory implemented infection control measures such as ``stopping meal services at employee dormitories'' and ``restricting the range of activities'', but there were too strict restrictions on behavior and ``bonuses were not paid at the promised time''. Employees dissatisfied with the deterioration of the working environment, such as 'there is no such thing' and 'garbage piles up inexhaustibly', caused protest demonstrations. There was also a collision with riot police trying to suppress the protest demonstration, and it developed into a situation where injured people were transported by ambulance.

Employees and authorities collide in a large-scale demonstration at an iPhone factory in China - GIGAZINE



As mentioned above, the lockdown in Zhengzhou City was physically and mentally harsh, and it was reported that some people could not withstand the lockdown and escaped from the iPhone manufacturing factory. In addition, the significant decline in Foxconn's manufacturing capacity has resulted in a major blow to Apple, as reported by the analysis result that ``the production volume of iPhone 14 Pro in 2022 will decrease by 6 million units.''

iPhone 14 Pro production likely to drop by nearly 6 million units, likely to get worse as lockdown continues, due to disruption at Foxconn, Apple's main manufacturing base-GIGAZINE



The lockdown in Zhengzhou City has been lifted in stages from 00:00 on November 30, 2022. According to the official announcement, the lockdown will be lifted in order from ``areas where no new infections have been confirmed for 5 days''.

Although the lockdown was lifted, Daniel Ives, who is investigating at Wedbush Securities, analyzed that Apple suffered a sales loss of about $ 1 billion (about 137 billion yen) during the lockdown period. I'm here. In addition, analyst Ming-Chi Kuo, who is known for his accurate forecasts related to Apple, expects iPhone 14 Pro and iPhone 14 Pro Max shipments in the fourth quarter of 2022 (October to December) to be 15 million. We predict that it will fall below 20 million units.




In China, there is a possibility that production capacity will be reduced due to the above lockdown, etc., and establishing a large-scale manufacturing base in China may pose a risk of hindering the stable supply of products. For this reason, it was reported that Apple was shifting manufacturing bases to countries other than China such as India and Vietnam. As a result of a new analysis of Apple's supply chain by Reuters, China accounted for 49% of Apple's manufacturing bases in 2019, but gradually increased to 41% in 2020 and 36% in 2021. It has been found to be declining. In the future, Apple's departure from China is likely to accelerate.

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in Mobile,   Hardware, Posted by log1o_hf