Following the COVID-19 outbreak, the Chinese city of Zhengzhou, known locally as iPhone City since it is home to the world's largest iPhone factory, Foxconn Technology Group, has been placed into immediate lockdown.
The lockdown is seen to have an immediate effect on iPhone 13 production. It will also impact Apple's preparations for iPhone 14 as the world's largest iPhone factory, operated by Foxconn Technology Group, is located in Zhengzhou.
The local government of Zhengzhou imposed a seven-day lockdown as part of Covid-19 control measures.
Apple Supplier Foxconn Freezes Hiring of New Workers
Zhengzhou, which recorded four new COVID-19 cases and 10 new asymptomatic carriers, imposed a citywide lockdown.
Following the lockdown, Foxconn, the world's largest electronics contract manufacturer, halt its hiring of new assembly line workers until further notice, as per South China Morning Post report. They made the announcement on Wednesday.
The suspension followed after Foxconn's announced plans earlier this week to boost recruitment by offering higher cash bonuses.
According to a report on Tuesday by Taiwanese newspaper Economic Daily News, as cited by the South China Morning Post, Foxconn's Zhengzhou operation earlier this week planned to increase the cash bonus offered to recruits to 8,500 yuan (US$1,286), up from the previous 6,500 yuan due to the pressure to meet production requirements for Apple's upcoming iPhone 14 range of models.
The decision to suspend the hiring of new assembly line workers could cause complications in the iPhone 14 production schedule Foxconn.
According to Ivan Lam, a Hong Kong-based senior analyst at research firm Counterpoint, 60 to 80% of the world's iPhones are being produced at Foxconn's plant inside the Zhengzhou Airport Economy Zone.
Thus, Apple's supply chain could have a big impact if that site encounters major problems, such as large-scale COVID-19 infections, the source added.
However, the COVID-19 situation in Foxconn's manufacturing complex in Zhengzhou seems to be under control as of now.
According to Lam, the main COVID-19-related disruption for Foxconn in Zhengzhou has been logistics as it now takes more time to transport components and materials into the factory due to testing and disinfection.
Should the Lockdown Make Apple Worry?
The current number of infected and carriers in Zhengzhou remains relatively small. But despite the tiny number and one-week lockdown, this is a hugely worrying development for Apple, according to 9to5mac.
In other cities, iPhone production was already hit by lockdowns. However, it still works for Apple as the largest iPhone factory in the world remains unaffected.
According to 9to5mac, Foxconn has backup production lines in Zhengzhou specifically intended to pick up assembly slack when other parts of China are in lockdown.
The short-term lockdown in Zhengzhou will have a significant impact, but the more worrisome future is that once the infection takes hold in the city, there will be further or continued outbreaks that would affect Foxconn's operation, as per 9to5mac analysis.
