Unrest in the Chinese city that hosts Foxconn's mega iPhone plant will hit Apple hard, crippling its output and threatening deliveries. The tech giant is looking at a production shortfall of as many as 6 million units of iPhone Pro this year, Bloomberg has reported.
Foxconn's Zhengzhou plant, which produces Apple's popular iPhone 14 models and accounts for 70 percent of global iPhone shipments, was rocked by severe protests last week. Mass resignation of technical staff at the huge Foxconn plant was feared to have upset Apple's production and delivery targets, but the impact would be more serious than previously estimated, as per the latest report.
"It demonstrates that everyone, even Apple, is susceptible to supply-chain constraints in China due to Covid," Anshel Sag of Moor Insights & Strategy told Bloomberg.
If Apple has to keep its delivery targets, Foxconn will have to get people back to assembly lines as soon as possible, the person familiar with assembly operations told the news agency.
Reuters reported last week that production at the plant may plunge by at least 30 percent due to the staff unrest. "Following this week's bout of worker unrest at the plant, the source added, it was 'impossible' for the company to resume full production by the end of the month - a deadline it had set internally before Wednesday's wave of protests," the report said.
What Hit the Foxconn Plant?
Tension had been building up at the Apple plant for weeks following the rise of Covid-19 cases at the factory. The huge Foxconn plant employees upwards of 200,000 employees. In an apparent bid to contain the outbreak, Foxconn had reportedly asked workers to stay on the production line as the holiday season approached. Workers were also upset over some of the compensation terms, including the expected additional remuneration for working through a pandemic.
The protests that erupted on Tuesday, turned violent a day later, with hundreds of them fighting with Chinese police clad in hazmat suits. The officers were seen hitting protesters with batons and metal rods even as the workers were seen tearing down fences.
The Zhengzhou plant makes most of iPhone 14 Pro and Pro Max devices, and these two models are hugely in demand this year.
Apple shares had tumbled nearly 2 percent last Friday after reports revealed the depth of the crisis at the Foxconn plant.