Apple plans to LEAVE China as COVID protests delay production of its products

Apple plans to move parts of its production from China after government protests delayed products, as the company eye 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 outlet. Wall Street Journal.

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

Consumers are facing the longest wait times in the iPhone’s 15-year history, with estimated shipping dates after Christmas, the WSJ said. Furthermore, Apple’s Q4 productions are about 10 million less than expected, with the iPhone Pro and Pro Max being the most affected.

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

It is now looking to India and Vietnam to reduce its reliance on Taiwan-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 the COVID-19 protests and pay disputes that delay productions at its busiest time of year.

Apple’s factory in Zhengzhou, known as iPhone City, is only running at around 20 percent, but could rise to 40 percent this month, after China quarantined millions of people following a protest. Apple customers are facing the longest wait times in phone history and shipping dates are expected to extend beyond Christmas.

However, countries could pose a problem for the introduction of new production, since it does not have the number of production engineers and suppliers to build hundreds of millions of products like China.

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

But analysts told the WSJ that Apple is no longer comfortable keeping most of its business locked up in one place.

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

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

And Vietnam could be largely driving production of AirPods, smartwatches and laptops, WSJ reported.

Foxconn, which runs the Chinese factory, shipped $32 billion worth of products in 2019, but Apple is reportedly looking to switch to India and Vietnam. Apple hopes, in the long term, to ship up to 45 percent of its products from India, which currently only sells single digits.

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

Foxconn, which runs the Zhengzhou factory, shipped $32 billion worth of products in 2019 and accounted for nearly 4 percent of China’s exports in 2021, according to People’s Daily.

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

However, despite China easing some of the COVID-19 restrictions due to ongoing protests, the Apple factory is still short of many workers. Numbers are numbers, but they are estimated to be in the thousands or tens of thousands of workers, according to the WSJ.

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

Foxconn has tried to move some production to its Shenzhen factory, which is about 1,000 miles away from the main factory, but can’t fill the entire gap, according to the WSJ.

COVID-19 restriction protests (pictured) have erupted recently, in a rare show of government resistance in the communist country.

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

And now Foxconn is offering monetary incentives for workers to return to 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 ordered a lockdown of six million people after hundreds of workers took to the streets in Zhengzhou.

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

In a rare show of public anger, workers, furious over COVID-19 lockdown policies and working conditions, clashed violently with staff clad in hazardous materials and 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 from Thursday “unless necessary” to buy food or receive 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 China’s central Hubei province. Workers at the Zhengzhou iPhone plant have been under COVID-19 restrictions for weeks and have taken to the streets over their working conditions.

Also, Apple is facing India and Vietnam struggling to be able to handle the amount of production that China can, with Vietnam only having a tenth of the population that China has and only being able to handle a factory of 60,000 people compared to 300,000.

“They’re not making high-end phones in India and Vietnam,” former Foxconn executive Dan Panzica told the WSJ. No other place can do it.

Although India has the number of people, government coordination is not as good as China’s, leaving Apple dealing with very different regional government restrictions in the country.

“India is the Wild West in terms of consistent rules and in and out of things,” Panzica said.

Panzica believes that for Apple to succeed in diversifying its business, it will have to rely on “spreading it out and making more towns instead of big cities.”