Foxconn Claims to be Restarting Production at the Biggest iPhone Facility in the World

CNN Business in Hong Kong — Foxconn, an Apple supplier, claims that manufacturing capacity at its expansive site in central China, which has been impacted by Covid-19 limitations and worker protests since October, is "gradually" being restored.

The Taiwanese contract maker claimed in a statement on Monday that the "epidemic scenario" at the facility, known as iPhone City, where hundreds of thousands of workers typically live, has been brought under control.

It added that the outlook for the fourth quarter was anticipated to be in line with market consensus and stated, "We have also started to hire new staff and are progressively moving toward the direction of restoring production capacity to normal."

Foxconn didn't offer any additional information. According to Reuters, its executives told the news agency that full manufacturing would start up again between late December and early January.

According to Daniel Ives, an analyst at Wedbush Securities, the persistent supply issues at Foxconn's site in the city of Zhengzhou were costing Apple almost $1 billion a week in lost iPhone sales. He calculates that during the crucial holiday sales season, Apple is lacking between 10 million and 15 million iPhones.

Worker departures from the campus in October over unfavorable working conditions and food shortages marked the beginning of the problems. As a result of the staff shortage, bonuses were provided to employees.

However, when freshly hired personnel claimed management had broken their commitments, there were protests last month. Security guards and employees got into a fight before the corporation finally gave them monetary incentives to leave.

Analysts predicted that Apple's supply chain diversification away from China would accelerate as a result of the production problems at iPhone City.

The Wall Street Journal claims that Apple (AAPL) has advanced preparations to move part of its production outside of China in recent weeks. According to reports, it was instructing suppliers to make more aggressive plans for building Apple (AAPL) products in other countries throughout Asia, especially India and Vietnam.

A request for comment from Apple was not immediately complied with.

Ives stated in a research note published on Sunday that "the shift out of China will not be easy and come with significant logistical, engineering, and infrastructure difficulties as the aggressive move to India and Vietnam now begin with the Apple ecosystem alerted."

If Apple takes active action, compared to the single-digit rate today, more than 50% of iPhone manufacture might originate from India and Vietnam by the 2025–2026 fiscal year.

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