Apple warns of hit to iPhone shipments amid Covid-19 disruptions in China

APPLE’S biggest iPhone maker, Taiwan’s Foxconn, said on Monday (Nov 7) that it was working to resume full production at a major plant in China’s Zhengzhou as soon as possible, with the area hit by Covid-19 curbs.

China ordered an industrial park that houses an iPhone factory belonging to Foxconn to enter a seven-day lockdown on Wednesday, in a move set to intensify pressure on the Apple supplier as it scrambles to quell worker discontent at the base.

The Zhengzhou Airport Economy Zone in central China said it would impose “silent management” measures with immediate effect, including barring all residents from going out and only allowing approved vehicles on roads within that area.

Foxconn, the world’s largest contract electronics maker, said in a statement that the provincial government in Henan, where Zhengzhou is located, “has made it clear that it will, as always, fully support Foxconn in Henan”.

“Foxconn is now working with the government in concerted effort to stamp out the pandemic and resume production to its full capacity as quickly as possible.”

In a statement released at the same time, Apple said it expects lower iPhone 14 Pro and iPhone Pro Max shipments than previously anticipated as Covid-19 restrictions temporarily disrupt production in Zhengzhou.

Customers will experience longer wait times to receive their new products, said Apple, which released the new iPhone 14 for sale in September.

Foxconn, formally Hon Hai Precision Industry, is Apple’s biggest iPhone maker, accounting for 70 per cent of iPhone shipments globally. It makes most of the phones at the Zhengzhou plant where it employs about 200,000 people, though it has other smaller production sites in India and southern China.

Having previously guided for “cautious optimism” in the fourth quarter, Foxconn said it will “revise down” its outlook given events in Zhengzhou.

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However, the firm reported October sales had soared 40.97 per cent year-on-year, a record high for the same period, but down 5.56 per cent compared to the previous month.

“Benefiting from the launch of new products in October, stable demand for major products, and strong demand in the server market, revenue in all four major product segments grew,” it said, referring to computing products, smart consumer electronics products, and cloud and networking products.

Computing products, smart consumer electronics products, and cloud and networking products all showed double-digit growth last month, compared to the same period last year, the company added.

The fourth quarter is traditionally the hot season for Taiwan’s tech companies as they race to supply cellphones, tablets and other electronics for the year-end holiday period in Western markets.

Foxconn is due to release its third-quarter earnings on Nov 10. REUTERS