Apple plans to LEAVE China as COVID protests delay production

Apple plans to LEAVE China as COVID protests delay production of its products: Tim Cook could move factories to India and Vietnam after brutal lockdown at iPhone plant mean key deliveries won’t arrive in time for Christmas

  • Apple has accelerated plans to move its productions outside Zhengzhou, China – where iPhone City is located – in recent weeks
  • COVID-19 protests and wage disputes have broken out in the city, leaving Apple’s busiest time of year in shambles with production and delivery delays 
  • Consumers are facing the longest wait times in the iPhone’s 15-year history
  • It is now eyeing India and Vietnam to reduce its dependency on Taiwanese-based assemblers led by Foxconn Technology Group, which runs the factory 
  • Apple is hoping, long-term, to ship up to 45 percent from India, which currently only does single digits, and Vietnam could handle AirPods and laptops 

Apple is planning to move parts of its production out of China after violent governmental protests delayed the company’s production – as CEO Tim Cook eyes up Vietnam and India as new hubs. 

The tech giant has accelerated plans to leave Zhengzhou, China – where iPhone City is located – in recent weeks, a source told the Wall Street Journal. 

COVID-19 protests and wage disputes have broken out in the city, which employs up to 300,000 workers, leaving Apple’s busiest time of year in shambles with production and delivery delays. 

Consumers are facing the longest wait times in the iPhone’s 15-year history, with estimated ship dates being after Christmas, WSJ said. In addition, Apple’s fourth quarter productions are around 10million less than expected, with iPhone Pro and Pro Max being hit the hardest. 

In November, the company issued a notice that iPhone backups could happen due to the health restrictions in Zhengzhou. 

It is now eyeing India and Vietnam to reduce its dependency on Taiwanese-based assemblers led by Foxconn Technology Group. 

Tim Cook’s company Apple is looking to work parts of its production out of China due to COVID-19 protests and wage disputes delaying productions at its busiest time of the year 

Apple’s Zhengzhou factory – known as iPhone City – is only running at around 20 percent, but could be bumped up to 40 percent this month, after China quarantined millions of people after a protest. Apple customers are facing the longest wait times in the phone’s history and ship dates are estimated to extend past Christmas 

However, the countries could propose an issue for new production introduction as it does not have the amount of production engineers and suppliers to build hundreds of millions of products like China does. 

iPhone City, located in Zhengzhou, made around 85 percent of Pro lineup at one point. 

But analysts told WSJ that Apple no longer feels comfortable having the majority of its business locked in one place. 

‘In the past, people didn’t pay attention to concentration risks,’ former US executive for Foxconn, Alan Yeung said. ‘Free trade was the norm and things were very predictable. Now we’ve entered a new world.’ 

Apple is hoping, long-term, to ship up to 45 percent of its products from India, which currently only does single digits, according to Ming-chi Kuo, an analyst at TF International Securities. 

And Vietnam could be largely handling the production AirPods, smartwatches and laptops, WSJ reported.  

Foxconn, which runs the Chinese factory, shipped $32billion in product in 2019, but Apple is reportedly looking to shift to India and Vietnam. Apple is hoping, long-term, to ship up tp 45 percent of its products from India, which currently only does single digits

However, the company could still maintain a large presence in China – which has brought in around 1million local jobs, according to People’s Daily, a state-backed newspaper – by using other supplies. Two companies Apple is reportedly considering is Luxshare Precision Industry Co. and Wingtech Technology Co. 

Foxconn, which run the Zhengzhou factory, shipped $32billion in product in 2019 and accounted for nearly four percent of China’s exports in 2021, according to People’s Daily. 

Even with Beijing’s tensions with Taiwan, which the US has been politically involved in, the country still looks fondly at Apple presence in the country, the People’s Daily reported.

However, despite China easing some of the COVID-19 restrictions due to the ongoing protests, Apple’s factory is still missing a lot of workers. Numbers are number, but it is estimated to be thousands to tens of thousands of workers, according to WSJ. 

Kuo estimated that it is running at about 20 percent capacity, but it could shoot up to 40 percent this month. 

Foxconn has tried to move some of the production to its Shenzhen factory, which is roughly 1,000 miles away from the main factory, but it cannot make up the entire gap, according to WSJ. 

COVID-19 restriction protests (pictured) have broken out recently, in a rare display of government resistance in the Communist country 

A protest broke out near the factory and the government ordered at five-day quarantine 

And now Foxconn is offering monetary incentives to get workers back in the factory by offering an $1,800 bonus in January to any full-time worker who started in November or earlier. Those who wanted to quit got a reported $1,400. 

Last week, China has ordered six million people into lockdown after hundreds of workers took to the streets in Zhengzhou. 

Beijing’s move to crush the dissent came after images of the protests went viral, and as the number of coronavirus cases in China hit an all-time high – nearly three years into the pandemic and the Chinese Communist Party’s zero-COVID-19 approach.

In a rare display of public anger, workers – furious over COVID-19 isolation policies and working conditions – violently clashed with hazmat-clad personnel wielding batons.

In the wake of the unrest, residents of eight districts of Zhengzhou, home to 6.6 million people, were told to stay home for five days beginning Thursday ‘unless necessary’ – to buy food or get medical treatment.

Daily mass testing was ordered in what the city government called a ‘war of annihilation’ against the virus. The restrictions do not cover the iPhone factory, where workers have already been under COVID-10 restrictions for weeks.

 Workers (pictured in August) line up to get tested for COVID-19 at the Foxconn factory in Wuhan in central China’s Hubei province. Workers at the Zhengzhou iPhone plant been under COVID-19 restrictions for weeks, and have taken to the streets over their working conditions

In addition, Apple faces the struggle of India and Vietnam being able to handle the amount of production that China can, with Vietnam only have a 10th of the population that China does and can only handle a 60,000 person factory compared to 300,000. 

‘They’re not doing high-end phones in India and Vietnam,’ former Foxconn executive, Dan Panzica, told WSJ. ‘No other places can do them.’ 

Although India has the number of people, the government coordination isn’t as good as China’s, leaving Apple deal with vastly different regional government restriction in the country. 

‘India is the Wild West in terms of consistent rules and getting stuff in and out,’ Panzica said. 

Panzica believes that in order for Apple to succeed to diversifying its company, it’s going to have to rely on ‘spreading it around and making more villages instead of big cities.’ 

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