FOXCONN KEEPS UP CURBS AMID ORDER RUSH
Troubled iPhone maker implores Zhengzhou workers to ‘have more understanding and support’ for closed-loop production restrictions
The world’s largest iPhone factory, operated by Foxconn Technology Group in Zhengzhou city, has kept up its “closed-loop” production system that restricts movement of employees since mid-October, as Apple’s prime supplier remains under pressure to meet surging demand during the holiday season.
Foxconn’s integrated Digital Product Business Group, the division responsible for iPhone assembly, described this status quo over the weekend in an open letter, which implored workers at the manufacturing complex to “have more understanding and support” for the closedloop policy amid the company’s efforts to “successfully complete orders”.
The Taiwanese contract manufacturer reassured workers that infections from Covid-19’s Omicron variant at the facility “are mostly mild or asymptomatic”, adding “there will be no after-effects”, the open letter said.
The appeal comes after most parts of Zhengzhou, the capital of Henan province, lifted pandemic controls last week as the central government signalled a shift in its zero-Covid policy. Many mainland cities, including Beijing and Shanghai, no longer demand regular polymerase chain reaction testing.
Foxconn’s open letter also assured workers that “living and working with those recovered from Covid-19 is safe”, while suggesting those “who get reinfected will not infect people around”.
The credited author of the open letter is an “expert team”, which comprises people under the Henan healthcare authority and Foxconn’s “pandemic prevention and control command” in the province.
This latest communication reflects the urgency of Foxconn’s efforts to restore full production capacity at Zhengzhou following severe disruptions including worker protests that turned violent and the exodus of tens of thousands of employees.
That concern was highlighted late last month when Apple issued a statement about sending a team to the Zhengzhou plant to work closely with the supplier “to ensure their employees’ concerns are addressed”.
Apple could ship 20 per cent fewer smartphones this holiday quarter than expected, according to a forecast by TF International Securities analyst Kuo Ming-chi.
The protests and manpower shortage prompted Kuo to slash his forecast iPhone shipments by a fifth to between 70 million and 75 million units for the December quarter as sales of the iPhone 14 Pro and Pro Max models are expected to fall short by 15 million to 20 million units.
Last month’s Black Friday shopping festival in the United States saw many consumers have trouble finding the two high-end iPhone models online and offline because of the manufacturing disruptions in Zhengzhou.
Foxconn’s sprawling compound, known as “iPhone City”, typically has about 300,000 workers on its assembly lines at this time of the year to meet large holiday orders.
As the struggles continue, Apple and Foxconn, the world’s largest electronics contract manufacturer, are keen to further diversify where iPhone assembly lines are located.
Foxconn said it had injected 1 billion yuan (HK$1.1 billion) into its facilities in Taiyuan, the capital of Shanxi province, according to a stock exchange filing last Friday.
The company also announced a US$58.98 million investment in a subsidiary in the Czech Republic, which followed a US$300 million investment in a new Apple plant in Vietnam in August.
While Apple has reportedly accelerated plans to shift more output outside China, such relocation will be a marathon. Vietnam’s manufacturing industry was short of workers, while “India is the Wild West in terms of consistent rules and getting stuff in and out”, former Foxconn executive Dan Panzica was quoted as saying by The Wall Street Journal.