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DOW 33,076.82 0.18%
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WORLD’S LARGEST IPHONE FACTORY BOUNCES BACK FROM COVID DISRUPTION THAT HURT
APPLE

By Wayne Chang and Juliana Liu, CNN
Updated 4:55 AM EST, Wed January 4, 2023
Link Copied!

Foxconn's logo as seen outside the company's building in Taipei, Taiwan,
November 10, 2022.
Ann Wang/Reuters
Hong Kong CNN  — 

Production at the world’s biggest iPhone factory, disrupted since October by
China’s Covid-19 restrictions and worker protests, is now running at nearly full
capacity, according to a Chinese state media report.

The sprawling campus in central China, owned by Apple (AAPL) supplier Foxconn,
was running at 90% of planned production capacity at the end of December, the
Henan Daily newspaper reported Tuesday. It cited an interview with Wang Xue,
deputy general manager of the facility, which is also known as iPhone city.

“At the moment, the order books look good, and the orders will peak from now
until a few months after Chinese New Year,” he was quoted as saying. The Lunar
New Year will begin on January 22.

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Foxconn hasn’t yet responded to CNN’s request for comment about the report.

The company said last month it was working on restoring production, which had
been badly affected by supply disruptions caused by Covid restrictions. Wedbush
Securities analyst Daniel Ives estimated in November that the disruptions in
Zhengzhou had been costing Apple roughly $1 billion a week in lost iPhone sales.

According to a UBS report in November, the wait time for the latest 14 Pro and
14 Pro Max in the United States touched 34 days just before the Christmas
holidays because of supply chain constraints in China. The UBS analyst called
the wait time “extreme.”

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The Henan Daily separately quoted an executive responsible for Foxconn’s
logistics as saying that, in the first two days of January, the volume of
inbound and outbound shipments had reached the highest level in a year.

The report of a nearly full resumption of production comes one month after China
abruptly ended three years of pandemic controls, setting off a huge wave of
Covid infections.

According to a report in the Wall Street Journal, a letter from Foxconn founder
Terry Gou played a major role in persuading Chinese leaders to accelerate plans
to dismantle the country’s Covid-19 policies. Gou was quoted as warning that
strict Covid controls would threaten China’s central position in global supply
chains.

Gou’s office told CNN that it “denies the report and its contents.”

Wang was quoted by the Henan Daily as saying iPhone City currently had about
200,000 workers on site. The employees were each eligible for a maximum of
13,000 yuan ($1,883) per month in bonuses, he said, without specifying their
base salaries.

The troubles for Foxconn started in October when workers left the campus,
located in the central Chinese province of Henan, because of concerns about
Covid-related working conditions and shortages of food. Short on staff, bonuses
were offered to workers to return.

But violent protests broke out in November when the newly-hired staff said
management reneged on their promises. Workers clashed with security officers,
before the company eventually offered them cash to quit and leave the site.

Analysts said the production woes at iPhone City would speed up the pace of
Apple’s supply chain diversification away from China.


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