BEIJING —
Apple has warned that customers would face longer wait
times for iPhones with the holiday season approaching, after COVID restrictions
in central China "temporarily impacted" production at the world's
largest factory producing the smartphone.
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Foxconn, Apple's principal subcontractor, locked down its massive
factory in Zhengzhou last month after a spike in infections — in line with
China's zero-COVID policy.
In a separate statement on Monday, the Taiwanese firm said its fourth-quarter
earnings this year would take a hit from the coronavirus lockdowns.
Panicking workers last week had fled the site on foot in the wake of
allegations of poor conditions at the facility, which employs hundreds of
thousands of workers.
"COVID-19 restrictions have temporarily impacted the primary iPhone
14 Pro and
iPhone 14 Pro Max assembly facility located in Zhengzhou,
China," California-based Apple said in a statement late on Sunday. "The
facility is currently operating at significantly reduced capacity."
Despite strong demand for Apple's products ahead of the holiday season,
"we now expect lower iPhone 14 Pro and iPhone 14 Pro Max shipments than we
previously anticipated", it said. "Customers will experience longer
wait times to receive their new products."
Foxconn is
China's biggest private-sector employer, with more than a
million people working across the country in about 30 factories and research
institutes. But Zhengzhou is the Taiwanese company's crown jewel, churning out
iPhones in quantities not seen anywhere else.
"In a normal situation, almost all the iPhone production is
happening in Zhengzhou," Ivan Lam, an analyst with specialist firm
Counterpoint, told AFP.
Foxconn was initially "cautiously optimistic" about its fourth
quarter earnings, the company said. "But due to the pandemic affecting
some of our operations in Zhengzhou, the company will 'revise down' the outlook
for the fourth quarter," it said in a statement.
"Foxconn is now working with the government in (a) concerted effort
to stamp out the pandemic and resume production to its full capacity as quickly
as possible," the company noted. It did not give any statistical
projection for how badly it expected earnings to be hit.
"This is a dark sign of the zero-COVID policy in China impacting
production for Apple with Foxconn," Dan Ives, analyst at Wedbush
Securities, told AFP. "It confirms the Street's fears with Apple this
quarter and will be an albatross on the tech market this week."
'We are drowning'
Local authorities locked down the area surrounding the factory on
Wednesday, but not before reports emerged of a lack of adequate medical care at
the plant.
Multiple workers have recounted scenes of chaos and increasing disorganization
at Foxconn's complex of workshops and dormitories, which form a
city-within-a-city near
Zhengzhou's airport.
"People with fevers are not guaranteed to receive medicine," a
30-year-old Foxconn worker, who asked to remain anonymous, told AFP.
"We are drowning," he said.
China is the last major economy wedded to a strategy of extinguishing COVID
outbreaks as they emerge, imposing snap lockdowns, mass testing, and lengthy
quarantines despite the widespread disruption to businesses and international
supply chains.
And authorities poured cold water on speculations that the policy could
be relaxed on Saturday, with
National Health Commission spokesperson Mi Feng
saying that Beijing would "stick unswervingly to... the overall policy of
dynamic zero-COVID".
"At present, China is still facing the dual threat of imported
infections and the spread of domestic outbreaks," Mi said at a press
briefing.
"The disease control situation is as grim and complex as
ever," he said. "We must continue to put people and lives
first."
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