Bloomberg According to a well-informed source, the disturbance at the large iPhone assembly plant in Zhengzhou city will probably reduce the production volume of iPhone Pro to 6 million units by the end of this year. The conditions in this factory have not yet returned to normal and it is possible that the mentioned number will change.
In the wake of the Chinese government’s strict restrictions on the spread of the corona virus, a significant number of assembly line workers at the Zhengzhou factory managed by Foxconn went on strike and the work descended into violent clashes. Videos on social media showed workers walking for miles to escape the factory. The quarantine of the Zhengzhou factory had caused a severe food shortage there.
In response to the exodus, Foxconn hired new workers, but those workers protested against strict pay policies and coronavirus-related restrictions. It was said that the Chinese government sent a summons to the retired military personnel, asking them to appear in the production line and start working to prevent a crisis in the Zhengzhou factory.
For now, Foxconn has not been able to return the conditions of the large Zhengzhou factory to normal. If the restrictions related to Corona continue in the coming weeks, the volume of iPhone production will probably decrease even more.
Foxconn has announced that it will reward all workers who return to the assembly line. The company said all full-time workers at the plant during the holiday season will receive a monthly bonus of $1,800.
The Zhengzhou factory hosts 200,000 workers at the peak of iPhone production. Reports say more than 20,000 new recruits have left the plant in question in recent weeks. Foxconn is actively recruiting new staff with the help of Chinese officials. Foxconn, which is the largest private sector employer in China, has many years of expertise in the field of product assembly workforce recruitment.
Foxconn’s factory in Zhengzhou produces most of the iPhone 14 Pro and iPhone 14 Pro Max. These two are the best-selling Apple phones in 2022, and the Cupertino company has opened a special account on them. High demand for iPhone Pros has made up for the low sales of standard models to a large extent.
Bloomberg said earlier that Apple initially expected to sell 90 million new iPhones, but later lowered its forecast to 87 million units.
According to a source familiar with Bloomberg, Apple and Foxconn have estimated in the last two weeks that the problems at the Zhengzhou factory will reduce the volume of iPhone production more than expected. Apparently, the two companies expect the decline of 6 million units of iPhone production to be compensated in 2023.
Research institute Moor Insights & Strategy told Bloomberg: “This shows that everyone, including Apple, is susceptible to supply chain restrictions in China due to the Corona outbreak.”
Analysts at the prestigious Morgan Stanley Institute had predicted that Apple would produce 6 million iPhone Pros less than expected before the Zhengzhou factory turmoil. Given the current conditions, Wall Street analysts are likely to revise their initial forecasts.
Amir AnwarzadehThe analyst of Asymmetric Advisors Institute says that the blow to Apple and Foxconn as a result of the implementation of the zero Covid policy of the Chinese government is inevitable, but this event will probably give these two companies more incentive to reduce their dependence on China and go to other countries such as India and go to vietnam
Following the release of the Bloomberg report, Apple’s stock value fell 1.9 percent. Apple and Foxconn did not respond to media requests for further details.
The problems at the massive Zhengzhou factory – known locally as “iPhone City” – show once again that Apple needs to diversify its supply chain much more. The iPhone manufacturer has been heavily dependent on the Chinese market for years.