Hong Kong
CNN Business
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Zhengzhou city, central China, home to the world’s largest iPhone factory, raised The Covid-19 blockade order lasted for five days, in what analysts called a much-needed relief measure for Apple and key supplier Foxconn.
Zhengzhou is the site of “iPhone City,” a vast manufacturing campus owned by Taiwanese contract manufacturer Foxconn, which typically employs around 200,000 workers who make products for Apple.
(AAPL), including the iPhone 14 Pro and 14 Pro Max. Last Friday, City. lock its inner-city counties for five days as Covid-19 cases increased there.
Foxconn’s massive facility is not located in the inner city districts of the city. However, analysts say the lockdown will be detrimental to efforts to restore lost production at the campus, the site of a Violent workers’ uprising last week.
“This is some good news in a dark storm for Cupertino,” Daniel Ives, managing director of equity research at Wedbush Securities, told CNN Business, referring to the California city where Apple is headquartered. . “There’s a lot of difficulty ahead for Apple to ramp up operations again at factories.”
Ives estimates the ongoing supply disruption at the Foxconn facility in Zhengzhou has cost Apple about $1 billion in iPhone sales per week. The trouble started in October when workers left the campus in Zhengzhou, the capital of central Henan province, due to concerns related to Covid. Short of staff, bonuses were offered to returning workers.
But protests broke out last week when newly hired employees said management hadn’t kept their promises. The workers, who clashed with security officers, were eventually offered cash to quit and leave.
Analysts say Foxconn’s production difficulties will accelerate the pace of supply chain diversification from China to countries like India.
Ming-Chi Kuo, an analyst at TF International Securities, write on social media that he estimates iPhone shipments could be 20% lower than expected in the current quarter from October to December. He said the Zhengzhou factory’s average capacity utilization rate is only about 20% in November and is expected to improve to 30% to 40% in December.
According to Kuo, the total shipments of iPhone 14 Pro and 14 Pro Max in the current quarter will be between 15 million and 20 million units less than previously predicted. Due to the high price tag of the iPhone 14 Pro series, Apple’s total iPhone sales for the current holiday quarter could be 20% to 30% lower than investors’ expectations, he added.
