Covid-19 problems in China still hamper manufacturing
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But analysts and supply chain sources say production is starting to catch up with demand for the more expensive Pro model.
Models like the iPhone 14 Pro Max, which starts at around $1,100, are integral to Apple’s strategy of increasing revenue as the overall global smartphone market grows. slowing downThat strategy took a hit in October when the Covid-19 outbreak hit key manufacturing sites for iPhone Pro models.
A technology group located in Zhengzhou, central China.
Initially, Zhengzhou workers were only required to move between their workplaces and dormitories due to China’s strict COVID-19 measures. Due to the near lockdown, some workers fled, others clash with the policeinterfere with production.
China now Lifted most Covid control measures, the biggest problem in factories across the country is worker health.Nationwide, at least tens of millions of Chinese presumed to have caught coronavirus.
It’s unclear what percentage of Foxconn employees in Zhengzhou have Covid-19, but employees there said they knew many people around them who had developed fevers and other Covid-19 symptoms. Workers said some of the afflicted have continued to work, while others have taken time off.They said it’s hard to know who actually got Covid-19 because the country has suspended widespread testing and test kits. being insufficient.
Apple shares fell 3.07% in Wednesday trading to 126.04, their lowest level since June 2021, on fears that additional disruptions in China could hurt Apple’s production and sales early in the year. turned into dollars. Stocks rebounded on Thursday.
Nonetheless, analysts and those in the supply chain say the situation in China is far from normal, but at least better than the Foxconn workers’ clashes in November.
JP Morgan analyst Samik Chatterjee wrote in an investor note about the iPhone 14 Pro this week that “supply is improving and is slowly inching towards parity with demand.”
According to JP Morgan, the wait time for U.S. consumers to order the latest iPhone Pro models, which was previously extended to 40 days, has improved.
In the US and China, Apple’s website says the wait time for Pro models is about 1-2 weeks. Select Pro models and colors are available for immediate pickup at select Apple stores in both countries.
On December 8, Foxconn, the sole assembler of Apple’s high-end iPhone models, announced that it has ended travel restrictions at its Zhengzhou factory that have been in place for more than 50 days.
Analysts and supply chain sources say some of the iPhone manufacturing facilities have recovered somewhat and are operating at about 70 percent capacity. Still, Foxconn is struggling to restore full normalcy, they said.
Taiwan-based research firm TrendForce said labor shortages are affecting China’s supply chains. iPhone shipments for the January-March quarter are forecast to fall 22% year-on-year to 47 million units, below the previous forecast of 56 million units issued at the end of October. Numbers include all iPhone models.
This week, Foxconn offered bonuses worth about $700 to key manufacturing workers who wished to stay on the line until March 20th. This is a departure from Foxconn’s usual pattern of ramping up staff in the summer and fall to meet holiday demand. I will withdraw when the shopping season is over.
Sometimes referred to as “iPhone City,” the Zhengzhou factory employs as many as 300,000 people at its peak, manufacturing iPhones and other Apple products. At one point, the city alone accounted for about 85% of the iPhone Pro lineup, according to market research firm Counterpoint Research.
Foxconn, formerly known as Hon Hai Precision Industry Co., has moved some of its iPhone production to other facilities. in the south city of shenzhen.
Regardless of short-term production ups and downs, those in the supply chain say Apple is looking to: Diversify your supply chain to more locations outside of China such as India and Vietnam. The past year has highlighted the political and business risks of centralizing production in China.
Foxconn, which assembles iPhones in India, recently stepped up its technology to Started manufacturing several new iPhone models in India About the same time as the Chinese factory.
— Aaron Tilly contributed to this article.
Write to Yang Jie ([email protected]).
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