Apple production falters due to protests: iPhone manufacturer is preparing to relocate from China
Created: 12/05/2022, 2:50 p.m
By: Lisa Mayerhofer
The world's largest iPhone factory in China has limited production due to the unrest.
Apple must therefore plug in a weekly loss of billions - and is looking for alternatives.
Zhengzhou – China has been seething for months because of the strict zero-Covid policy: mass tests, local lockdowns and travel restrictions have pushed many residents to the brink of their strength.
Frustration at the authorities' crackdown has now taken people to the streets in some of the country's largest cities.
Workers at the country's largest iPhone factory also took to the streets to protest the tough corona restrictions.
The protests mainly affect the production of the iPhone 14 Pro and iPhone 14 Pro Max - Apple can therefore no longer deliver its new flagship in time before Christmas in many cases.
The tech group now seems to be fundamentally rethinking its China strategy.
China: Largest iPhone factory still affected by unrest
At the end of November, numerous videos circulated on the online services Weibo and Twitter, showing hundreds of workers demonstrating at the Apple supplier Foxconn factory in central China's Zhengzhou.
Some of them were blocked by people in hazmat suits and riot police.
Foxconn spoke of "violence" in the factory.
The factory in Zhengzhou is an entire industrial complex, called "iPhone City", where around 200,000 people work.
Most are housed on-site, in large dormitories.
In early November, a lockdown was imposed around Foxconn's premises, affecting 600,000 people.
Meanwhile, the workers complained about miserable conditions in the factory until the situation escalated.
Foxconn tries to limit the damage - the company offers bonuses to employees and tries to hire new people.
But it will be a while before everything is up and running again: after the riots, the iPhone factory will probably only reach full production capacity again at the turn of the year, a person familiar with the matter told the
Reuters
news agency on Monday.
Apple: delivery problems with the iPhone 14 Pro and iPhone 14 Pro Max
The group is the largest private employer in China with more than a million employees at around 30 locations.
As a supplier to Apple, Foxconn manufactures around 70 percent of the iPhones - the affected factory in Zhengzhou mainly produces iPhone 14 models.
Chinese employees of the Apple supplier Foxconn work in the Lunghua plant.
The group is the largest private employer in China with more than a million employees.
(Archive image) © Ym Yik/epa/dpa
Apple announced in early November that its Zhengzhou factory was operating at "significantly reduced capacity";
The production of the iPhone 14 Pro and iPhone 14 Pro Max is affected. Customers therefore have to wait longer for the delivery of these devices.
It is now also clear that Apple will have to disappoint its fans at Christmas, who would have wished for one of the new top models as a gift under the Christmas tree.
And that also hits the group very hard – during its peak sales period.
According to
Welt
, the investment house Wedbush Securities expects the problems in China to mean a loss of sales of one billion dollars a week for Apple.
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Apple wants to increasingly shift production to India and Vietnam
According to a report in the Japanese newspaper Nikkei Asia, Apple and other tech companies and their suppliers are still preparing for difficulties in China – mainly because of the corona policy and protests.
And they're starting to look for alternatives outside of China.
According to information obtained by the Wall Street Journal, Apple has urged its suppliers to plan more actively in other Asian countries.
Locations in India and Vietnam in particular should be considered.
Accordingly, the center of iPhone production will be relocated to India in the future.
Laptops, smartwatches and AirPods, on the other hand, are said to increasingly come from Vietnam.
Apple is also planning to place more orders with companies other than Foxconn, including in China.
With material from the AFP
