Apple faces further iPhone manufacturing delays amid mass Covid outbreak in China
26 December 2022, 13:25
Apple is facing further manufacturing delays for its new iPhone amid rocketing Covid-19 cases in China, with experts warning of months of disruption.
Analysts have warned Apple will be hit with more supply chain disruption after a coronavirus outbreak at a megaplant run by Foxconn in Zhengzhou, China, known as “iPhone City”.
Covid-19 cases in China have jumped dramatically this month after the government lifted lockdown restrictions following nationwide protests against its zero Covid' policy.
On Friday, authorities said that an estimated 250 million people had tested positive Covid in the past 20 days.
The country's National Health Commission hasn't reported any deaths from Covid in the past four days.
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Around 90 per cent of the Apple's products are assembled in China, though chaos at the factory has forced the US tech giant to consider moving manufacturing elsewhere in an attempt to strengthen its global supply chain and manage geopolitical tensions.
The firm is accelerating plans to make iPads in India for the first time, and has already started production of its new iPhone 14 as well as older models there.
It is also looking at plans to produce its MacBooks laptops in neighbouring Vietnam, according to reports.
Ming-Chi Kuo, an analyst at TF International Securities, warned that the company was on course to “cancel or postpone” mass production of the SE4, a cheaper priced smartphone, due to cost pressures that resulted from the global recession that's expected next year.
Apple had already seen lockdown-related supply chain delays, which will be exacerbate by the outbreak at the mega facility in Zhengzhou, which employs over 200,000 people.
Bindiya Vakil, CEO of Resilinc, a group that provides supply chain mapping services, told the Financial Times: “We should be seeing a lot of operations get impacted by absenteeism, not just at factories, but warehouse, distribution, logistic and transportation facilities as well.”
According to reports from the Foxconn factory, some workers were being forced to work despite catching Covid, in order to help catch up on delayed production of the latest iPhone models, The Times reported.
Seven Foxconn workers told the website Rest of World they had contracted Covid after joining the factory this month, and despite showing symptoms, were ordered to keep working.
The manufacturer has struggled to hit production targets after protests from employees over wages and conditions in November.
Apple has seen 14 consecutive quarters of revenue growth, but its run looks to be under threat.
Mr Kuo estimates that production delays and worker shortages mean the US firm is facing a shortage of 15 million units of the latest iPhone.
Analysts expect the firm's annualised revenues for the last quarter of the year to drop below the $124 billion it saw this time last year, which was a record.
