China COVID Outbreak Slows Apple iPhone Production

iPhone production has been disrupted by the COVID outbreak

New COVID outbreak in China disrupts production at key iPhone Factory 

The recent closure of a key iPhone Factory in China could delay production and delivery of new Apple iPhones, the company warned today. 

Production at a FoxConn plant in Zhengzhou was hit by a fresh outbreak of COVID-19 infections, forcing the facility to close, locking inside over 200,000 workers according to various media sources. 

FoxConn, Apple’s largest iPhone manufacturer, has a large presence in Zhengzhou, dubbed “iPhone city” by the locals, with over 500,000 iPhones produced in a day, making it the largest single factory of iPhones, according to The New York Times.  

The iPhone is a key source of revenue for Apple, usually contributing over half of Apple’s overall sales revenue, as reported in Statista.  

Despite efforts at diversifying supply chain production away from China to other countries such as India and Vietnam, Apple still relies on China to produce over 90% of all iPhones according to analysts. 

This shutdown is the second this year to affect Apple, having lost $4 billion in lost sales of iPads and Macs over the Spring and Summer due to a COVID-19 outbreak at factories in and around Shanghai. 

Another delay in production will no doubt have a knock-on Apple’s share price, which has so far managed to avoid the steep share price declines that peers such as Alphabet, Amazon and Meta have suffered 

The slump in production at key factories in China - which Reuters previously reported could be as much as 30% - could not come at a worse time for Apple, as production should normally be ramped up this time for the year, as vendors including Apple, get ready to sell products for the upcoming holiday season. 

Post Date: 07/11/2022

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