This week’s violent labor protest at the world’s largest iPhone factory in central China added to the strain on Apple’s already-stretched supplies. Additionally, it emphasized how the country’s strict zero-Covid policy is hurting big global technology firms.
Workers left the industrial campus in Zhengzhou, the capital of the central province of Henan, due to Covid worries last month. To entice workers to return, bonuses were offered. However, 40 workers attacked management and security guards on Monday night in a dispute over unpaid salaries. According to local media sources, two guards were injured before police arrived.
This incident has cast doubt on Apple’s manufacturing partner Foxconn’s capacity to maintain consistent production of popular smartphones. In addition, on Thursday, a Chinese watchdog expert published a comprehensive report that revealed labor abuses at Foxconn plants, such as excessive overtime hours without pay and unsafe working conditions.
Analysts predict Foxconn’s problems will quicken the company’s shift away from China and toward countries like India.
“Apple’s ongoing production halt at Foxconn’s enormous facility in the central Chinese city of Zhengzhou is albatross,” said Daniel Ives, managing director of stock analysis at Wedbush Securities.
“Every week of this shutdown and unrest, we estimate it 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,” he said.
Following Wednesday’s escalation in which workers clashed with security forces, Foxconn may now lose more than 30% of its November production, up from an internal estimate of up to 30% when the labor disputes flared in late October, according to the source.
The facility only produces luxury iPhone models, including the iPhone 14 Pro, and the insider believes complete production will not restart by the end of this month.
“Worker unrest at Foxconn’s Chinese facility could weigh on Apple’s November iPhone shipments,” said Victoria Scholar, head of investment at Interactive Investor, as concerns rise over Apple’s capacity to supply devices during the busy holiday season.
Best Buy Co. in the United States warned on Tuesday that it expects high-end iPhones to be in limited supply this holiday season. According to Reuters, iPhone sales at Apple stores in the United States during the Black Friday shopping season were down from a year ago, and restocking took longer.
