Big Setback for Apple; iPhone Supply Chain Takes Hit From China's Covid-Zero Enforcers
With little warning, China locked down the world's largest iPhone factory on Wednesday, declaring the zone around the Zhengzhou Foxconn Technology Group complex off-limits to combat a local Covid-19 outbreak. It's the last thing Apple Inc. needed.
The abrupt move is expected to further disrupt a factory already grappling with an outcry over an on-site coronavirus outbreak, worker exodus and enforced quarantine. Local authorities said Wednesday that they'll sterilize Foxconn's campus and the surrounding areas in the next three days and send N95 masks to workers, another sign of the government's tightening grip.
It served up a stark reminder of the dangers for Apple of relying on a vast production machine centered on China in a time of unpredictable lockdowns and uncertain trade relations. The company's shares fell 3.7% on Wednesday, dragged down in part by the latest comments from Federal Reserve Chairman Jerome Powell.
“The Zhengzhou plant plays a monumental role in increasing capacity ahead of the holiday season,” said Nicole Peng, an analyst with Canalys. “Some of the orders generated in holiday promotional campaigns may not be able to be immediately delivered. Product delivery in certain channels could also be delayed.”
For now, Foxconn's plant will keep operating within a “closed loop,” or a self-contained bubble that limits contact with the outside world, the company said in a statement Wednesday. That will keep some production going. But Foxconn didn't address questions about how it will ship goods in and out of the compound during the area's lockdown.
Xi Jinping's Covid Zero policy, which relies on swift lockdowns to stamp out the disease wherever it pops up, has shown little regard for the economy and
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