China isolates largest iPhone factory No one is leaving or entering, Apple is on alert and Christmas is in danger

China isolates largest iPhone factory No one is leaving or entering, Apple is on alert and Christmas is in danger

A forced quarantine had already been set up within Foxconn, forcing hundreds of employees to flee overnight. On Tuesday, 359 new cases of Covid-19 were registered at the facilities, three times more than the previous day, and there are rumors of deaths in the enclosure.

China has imposed a seven-day lockdown in the area around the main factory of tech giant Foxconn, the largest producer of iPhones, in the Zhengzhou region, following the latest reports of workers fleeing the site overnight after quarantine. outbreak of covid-19. The news is brought forth by financial agency Bloomberg, which adds that this decision will affect Apple’s exports and possibly shipments destined for different parts of the world, especially at Christmas.

After the scenario of the past few days, in which Chinese social networks were full of videos of young workers walking with bags on their backs after climbing over the fences of the industrial park, behold, the local government turned to WeChat (an application similar with Facebook in China) to announce the isolation perimeter by November 9. Persons and vehicles may only be seen on the public road for medical reasons or force majeure.

The new ban is expected to reduce the flow of workers and essential components for iPhone assembly, putting aside Apple’s ambitions to speed up production lines ahead of the holiday season.

The decision is part of the zero-covid policy imposed by Xi Jinping’s government and will be particularly damaging to Foxconn’s main operating base, which houses four of the giant’s five most recent models led by Tim Cook. produces and which was already in the grip. of an internal quarantine that forced more than 200,000 off the assembly line and prompted hundreds of others to flee the facility.

This forced isolation comes after 359 new cases of Covid-19 were discovered in Zhengzhou on Tuesday, three times more than the previous day.

From now on, the plant will operate in a “closed loop,” isolated in a bubble and independent from the outside world, Foxconn said in a statement. However, it has not yet been made clear how the company will ship and receive components needed to manufacture the devices so desired in most global markets.

Will it be harder to buy an iPhone this Christmas?

After the global transistor crisis, a pandemic that affected sales, and the rise in production costs caused by the war in Ukraine, this quarantine comes at a pivotal time for Apple. Despite remaining in a much more favorable position than its direct competitors in terms of sales, the North American giant had already given up on increasing production of new iPhone models after unconfirmed year-round demand growth. As reported by Bloomberg, Apple had better-than-expected results, but warned consumers that there would be a slowdown in production during the holiday season.

Faced with an attempt to contact Bloomberg, Apple has chosen not to comment on this incident which could lead to millionaire losses.

To meet the ambitions of the technology led by Tim Cook, Foxconn is trying to limit a possible downtime of the assembly line and has already raised wages after reallocating the discontinued production lines to other factories in Zehengzhou. In addition to all this, the Chinese iPhone maker has also tried to fend off rumors that some workers infected with Covid-19 died on the premises.

In previous lockdowns, Beijing has allowed state members and essential services to the local economy to bypass restrictions, as has happened in Shanghai, where factories have maintained production despite quarantines.

There is still hope for Apple

The good news for Apple is that Foxconn has significant reserves that should keep the assembly lines operational for a while yet. However, this storage is not infinite and can be exhausted depending on the duration of the confinement. It should be noted that it would not be the first time where a quarantine imposed by Beijing has extended over several months.

According to Bloomberg, it is unclear whether Foxconn has negotiated any sort of alternative procurement with Chinese authorities. This factory is responsible for 80% of the production capacity of the iPhone 14, 85% of the iPhone 14 Pro, according to Counterpoint analyst Ivan Liam, quoted by Bloomberg. Thousands of electronic components from Europe and the rest of the Asian continent regularly arrive at this installation, the devices are then assembled manually and exported to the rest of the world, ie any interruption would be a heavy blow to Apple itself.