Security forces clashed with workers at Apple’s Foxconn supplier in late November.
(Photo: via REUTERS)
Dusseldorf Apple wants to relocate parts of the production from China – and these plans are apparently gaining in urgency. In recent weeks, the electronics manufacturer has asked its suppliers to “more actively” plan the assembly of Apple products in other Asian countries such as India and Vietnam, the Wall Street Journal reports, citing insiders.
The group is thus reacting to the unrest in the Zhengzhou plant, where the contract manufacturer Foxconn manufactures Apple products, especially the new iPhone 14. At the end of November, there were violent clashes with the police at the site when workers opposed the strict corona restrictions and demonstrated the low pay.
Protests against the zero-Covid policy have since increased. Apparently in response to this, numerous large cities lifted corona rules at the weekend. In Urumqi – the starting point of the protests – shopping malls, markets and restaurants are expected to reopen on Monday, local authorities said on Sunday. In Nanning, capital of Guangxi province in the south of the country, the subway can also be used again without presenting a negative test. In Beijing, medicines for fever, cough and sore throat can again be bought without registering by name.
Nevertheless, it is still unclear how the tough corona policy advocated above all by head of state and party leader Xi Jinping will develop. Experts do not assume that there will be a fundamental turnaround in the short term. The impact on local manufacturing companies is therefore likely to remain large.
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The example of Apple shows the significant impact this can have: The production losses could amount to up to 20 million devices, as the analyst Ming-Chi Kuo from TF International Securities estimates. With up to 300,000 employees, the plant in Zhengzhou is one of the Group’s most important production facilities.
>> Read here: Apple is facing a huge production outage in China
According to information from the analyst, iPhone production was only 20 percent in November, and it will only improve to 30 to 40 percent in December. Foxconn is currently trying to lure workers back to work with bonus payments and higher salaries.
The addiction has existed for a long time. Around the turn of the millennium, Apple closed its own plants and outsourced production to external service providers, most of which produce in China. Chief executive Tim Cook, at that time Chief Operating Officer under founder Steve Jobs, was largely responsible for this strategy.
Management is now trying to find alternatives. According to media reports, India will play an important role in the production of the current iPhone generation for the first time this year. However, setting up a supply chain including suppliers is considered to be lengthy and complex, especially on this scale. Significant diversification is still years away, Bank of America recently emphasized in a report.
In any case, the urgency seems to be growing. The Wall Street Journal reports that Apple has asked contract manufacturers to prepare the locations outside of China for the mass production of new devices. In addition, the group is trying to find additional partners – even if they are based in China.
More: Corona restrictions cause unrest at Apple supplier Foxconn