Apple says iPhone production hit by China Covid lockdown

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Beijing (AFP) – Apple said Covid restrictions have “temporarily affected” production at the world’s largest iPhone factory in central China, warning that customers will now face extended wait times ahead of the holiday season.

Foxconn, Apple’s main subcontractor, shut down its massive factory in Zhengzhou last month after a spike in infections — in line with China’s zero-covid policy.

In a separate statement Monday, the Taiwanese company said its fourth-quarter profits would take a hit from the coronavirus lockdowns.

Last week, panicked workers fled the site on foot after allegations of poor conditions at the factory, which employs hundreds of thousands of workers.

“Covid-19 restrictions have temporarily impacted the primary iPhone 14 Pro and iPhone 14 Pro Max assembly plant in Zhengzhou, China,” California-based Apple said in a statement late Sunday.

“The facility is currently operating at a significantly reduced capacity.”

Despite strong demand for Apple products for the holiday season, “we now expect lower shipments of iPhone 14 Pro and iPhone 14 Pro Max than we previously expected,” it said.

“Customers will experience longer wait times to receive their new products.”

Foxconn is the largest private sector employer in China, with more than a million people working in about 30 factories and research institutes across the country.

But Zhengzhou is the crown jewel of the Taiwanese company, producing iPhones in quantities not seen anywhere else.

“In a normal situation, almost all iPhone production takes place in Zhengzhou,” Ivan Lam, an analyst at specialist firm Counterpoint, told AFP.

The company was initially “cautiously optimistic” about fourth-quarter earnings, it said.

“But due to the pandemic affecting some of our operations in Zhengzhou, the company will ‘update’ its fourth quarter outlook,” Foxconn said in a statement.

“Foxconn is now working with the government in (a) concerted efforts to eradicate the pandemic and resume production at full capacity as soon as possible,” the company said.

It gave no statistical projection for how badly they expected profits to be hit.

‘We are drowning’

Local authorities closed down the area around the factory on Wednesday, but not before reports came in of a lack of adequate medical care at the factory.

Multiple workers have told stories of chaos and increasing disorganization in Foxconn’s complex of workshops and dormitories, which form a city-within-a-city near Zhengzhou airport.

“People with a fever have no guarantee that they will receive medicine,” another Foxconn employee, a 30-year-old man who also wished to remain anonymous, told AFP.

“We’re drowning,” he said.

China is the last major economy sticking to a strategy to extinguish Covid outbreaks as soon as they happen, by imposing rapid lockdowns, mass testing and lengthy quarantines, despite widespread disruption to businesses and international supply chains.

And authorities poured cold water on speculation that the policy could be eased on Saturday, with National Health Commission (NHC) spokesman Mi Feng saying Beijing would “steadfastly stick to… the overall policy of dynamic zero-Covid ”.

“At present, China continues to face the dual threat of imported infections and the spread of domestic outbreaks,” Mi said at a news conference.

“The disease control situation is as grim and complex as ever,” he said. “We must continue to put people and lives first.”