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欧博客户端:iPhone supply chain takes a hit

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Critical period: People are seen waiting at a bus stand displaying an iPhone advertisement in Beijing. The plant lockdown comes in the middle of Apple’s peak production period in the build-up to the holiday shopping season. — AP

BEIJING: With little warning, China locked down the world’s largest iPhone factory on Wednesday, declaring the zone around the Zhengzhou Foxconn Technology Group complex off-limits to combat a local Covid-19 outbreak. It’s the last thing Apple Inc needed.

The abrupt move is expected to further disrupt a factory already grappling with an outcry over an on-site coronavirus outbreak, worker exodus and enforced quarantine.

Local authorities said Wednesday that they’ll sterilise Foxconn’s campus and the surrounding areas in the next three days and send N95 masks to workers, another sign of the government’s tightening grip.

It served up a stark reminder of the dangers for Apple of relying on a vast production machine centred on China in a time of unpredictable lockdowns and uncertain trade relations.

The company’s shares fell 3.7% on Wednesday, dragged down in part by the latest comments from Federal Reserve chairman Jerome Powell.

“The Zhengzhou plant plays a monumental role in increasing capacity ahead of the holiday season,” said Nicole Peng, an analyst with Canalys.

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“Some of the orders generated in holiday promotional campaigns may not be able to be immediately delivered. Product delivery in certain channels could also be delayed.”

For now, Foxconn’s plant will keep operating within a “closed loop,” or a self-contained bubble that limits contact with the outside world, the company said in a statement Wednesday.

That will keep some production going. But Foxconn didn’t address questions about how it will ship goods in and out of the compound during the area’s lockdown.

Xi Jinping’s zero-Covid policy, which relies on swift lockdowns to stamp out the disease wherever it pops up, has shown little regard for the economy and thrown swaths of the global supply chain in disarray.

It’s curtailed output for big names, from Tesla Inc to Toyota Motor Corp, often with little advance warning. But Apple is by far the largest business to adopt China as its factory floor.

Zhengzhou is the site of Apple’s most critical production, churning out four in five of its latest-generation handsets and the vast majority of iPhone 14 Pro units, according to Counterpoint senior analyst Ivan Lam.

The Cupertino, California-based company relies on its smartphone for roughly half its revenue, and the lockdown comes in the middle of its peak production season in the build-up to holiday season shopping.

Apple’s iPhone production ramps up to tens of millions of handsets per month at its peak – hundreds of thousands a day – every one of which needs a plethora of components, from chips and displays to casings.

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  • 2023-01-09 00:21:48

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