China’s iPhone City roars back to life
Following the country's shift away from its zero-COVID policy, Foxconn has also eased its COVID restrictions.
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The backstory: Foxconn is a Taiwanese company with a huge factory in Zhengzhou, China, that's known for producing iPhones and can fit around 300,000 workers who live in dorms on-site. But with COVID, the city has had a rough year. In October, production at the factory was disrupted due to COVID restrictions and worker protests. Thousands of employees were fleeing the factory and protesting the COVID measures that the factory had in place, including not being able to leave the campus and having a closed-loop operation.
More recently: It only got worse in December when China lifted most of its COVID controls and case numbers surged, with Apple at one point, according to Bloomberg, standing to lose almost 6 million units of iPhone production.
The development: Following the country's shift away from its zero-COVID policy, Foxconn has also eased its COVID restrictions and started offering bonuses of up to 13,000 yuan (US$1,883) per month to both new and current employees. It looks like this strategy is working because shipments in and out of iPhone City reached their highest level in a year during the first two days of January, according to a company exec. The factory is now running at nearly full capacity with around 200,000 workers. And the timing couldn't be better because the Lunar New Year shopping season is just around the corner, and the factory is at around 90% capacity to prep for it.
Key comments:
"At the moment, the order books look good, and the orders will peak from now until a few months after Chinese New Year," said Wang Xue, deputy general manager of the facility, to the Henan Daily newspaper in an interview, referring to the Lunar New Year holiday that begins on January 22.
"Production has almost fully resumed," said one of the people who are close to the matter to Reuters. "We expect a peak for cases before or after the Lunar New Year holiday."
"We have also started to recruit new employees, and are gradually moving toward the direction of restoring production capacity to normal," said Foxconn in a statement published last month, speaking on the factory was preparing to resume production.
"Every week of this shutdown and unrest we estimate is costing Apple roughly $1 billion a week in lost iPhone sales. Now roughly 5% of iPhone 14 sales are likely off the table due to these brutal shutdowns in China," said Daniel Ives, managing director of equity research at Wedbush Securities, to CNN in November, referring to the ongoing production shutdown in Foxconn.
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