The world’s largest iPhone production facility, located in central China, was the scene of a violent workers’ protest last week that severely interrupted Apple’s already limited supply, demonstrating how the country’s stringent zero-COVID policy is hurting foreign technology businesses. All of this began when workers left the industrial complex in Zhengzhou, the capital of the central province of Henan, last month due to worries over the rise in COVID-19. Following the personnel shortage, rewards were given to the workers.
However, according to a CNN story, this week there were protests because the newly hired staff believed the management had betrayed their commitments. The workers eventually received cash to resign and leave after tussling with security personnel dressed in biohazard suits. Analysts predict that the challenges experienced by Foxconn, a significant Apple supplier and the owner of the facility, will hasten the trend of diversification away from China.
China’s iPhone 14 manufacturing has stalled.
Daniel Ives, managing director of equities analysis at Wedbush Securities, calls the ongoing production slowdown at Foxconn’s enormous factory in the city of Zhengzhou, in the centre of China, a ‘albatross’ for Apple. According to Ives, Apple loses about $1 billion in weekly iPhone sales for every week that there is a shutdown or other disruption. Now that China is experiencing such violent shutdowns, perhaps 5% of iPhone 14 sales are probably no longer possible, according to CNN.
Ives said that there was a severe scarcity of iPhone 14 devices over the Black Friday weekend because there was far more demand than there was supply. He said that Apple had suffered a huge ‘gut punch’ this quarter as a result of the Foxconn production issues, which started in October. In addition to Daniel Ives, Ming-Chi Kuo, an analyst at TF International Securities, emphasised that the situation at the Zhengzhou campus has a negative influence on more than 10% of the world’s capacity to build iPhones.
Meanwhile, workers and videos posted on social media on November 23 claim that workers were beaten and detained during protests over anti-virus control contract disputes at the largest Apple iPhone manufacturing in the world. According to the Associated Press, footage shared on Chinese social media purportedly taken inside the Zhengzhou facility showed thousands of protestors wearing masks battling rows of police wearing white hazmat gear and plastic riot shields.
One person was even hit in the head with a club, while another was taken away while having his arms held behind his back. Demonstrators may be seen firing fire extinguishers against police in other video. They protested an unspecified breach of contract, according to social media posts. Notably, bad working conditions are widespread in China. 38 workers perished in a factory fire on November 21 in China’s Henan province.
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