Inflation and the energy crisis are slowing business growth. And the tech sector is no exception. Amazon, Google and Microsoft announced disappointing results. And at Meta, it’s a disaster.
However, among the tech giants, Apple is an exception. While the smartphone market is seeing its shipments drop, the Cupertino company recently announced good results and rising revenues, as far as iPhones are concerned.
The macroeconomic context affects the Apple brand less and this is logical, since it focuses on the market for high-end devices, which is less vulnerable to inflation.
However, while we are already living through a complicated period, the Cupertino company could also have a supply problem. Although the company is trying to diversify the countries in which iPhones are produced (India is among the options), the vast majority of shipments still come from China.
However, unlike the rest of the world, this country still applies a zero-COVID policy, and does not hesitate to apply strict measures in the event of an epidemic. And precisely, as Reuters reports, the city of Zhengzhou, where Foxconn’s largest iPhone factory is located, is affected.
According to the British media, the local authorities have announced a containment for the industrial zone where the Foxconn factory is located. Measures that apply until November 9.
The factory continues to assemble, but it’s complicated
It is not known exactly what restrictions apply to the Foxconn factory, where 200,000 employees work. But in any case, it continues to work. According to Reuters, the Apple supplier operates in a closed loop, and employees remain locked in its facilities.
However, we are beginning to wonder if this epidemic will have an impact on iPhone production, as Apple prepares for the holiday season after launching the iPhone 14 series.
Quoted by the BBC, Foxconn admits that a small number of employees in Zhengzhou have been affected by COVID-19.
“At present, the epidemic prevention work in Zhengzhou is progressing steadily, and the impact on the group is controllable. The operating outlook for this quarter remains unchanged”nevertheless assures the supplier.
Nevertheless, the situation would be quite difficult for the company to manage. Indeed, factory employees would flee because of this situation. On Twitter, a BBC correspondent shared a video that allegedly shows Foxconn workers climbing the fences to get home.
Workers have broken out of #Apple‘s largest assembly site, escaping the Zero #Covid lockdown at Foxconn in #Zhengzhou. After sneaking out, they’re walking to home towns more than 100 kilometers away to beat the Covid app measures designed to control people and stop this. #China pic.twitter.com/NHjOjclAyU
—Stephen McDonell (@StephenMcDonell) October 30, 2022
Faced with this situation, Foxconn takes out its checkbook. The company has increased bonuses for those working on assembly lines. Another bonus is distributed to employees who work more than 25 days per month.
The goal is to “gradually resume orderly production”, while thanking employees for their “persistence”.
So, for the time being, iPhone production at this large Foxconn factory has not been halted. However, others have already ceased production, due to the health situation.
For example, the manufacturer Nio has already confirmed the cessation of assembly of its electric vehicles in two factories located in the city of Hefei, also affected by COVID-19.