iPhone Assembler Foxconn Moves to Limit Plant Disruption as Shares Slide
Foxconn Technology Group's main listed arm fell the most in three weeks, after the world's largest maker of iPhones said it may boost capacity at alternative sites to mitigate potential disruption at its main Covid-stricken plant in China.
Foxconn, whose listed vehicle is Hon Hai Precision Industry Co., is grappling with mounting concern that a Covid flare-up at its main Zhengzhou plant could hurt production just as Apple Inc. gears up for the holiday season. The Taiwanese company also makes iPhones at a factory in Shenzhen, which together with Zhengzhou cranks out the majority of the world's iPhones. Its shares fell as much as 2.4% Monday in Taipei.
Social media erupted over the weekend with photos and videos of workers departing the Zhengzhou plant, some on foot, to return to hometowns miles away. They were seeking to escape hastily enacted Covid-prevention measures that have left many of the 200,000 staff grappling with inadequate living conditions. Other videos depicted local residents offering food and shelter to some of the departing staff.
Bloomberg hasn't verified the authenticity of the content. But the rising tensions underscore the economic and social costs of Xi Jinping's Covid Zero policy -- a rigorously policed system of mass testing and lockdowns that has fostered growing resentment. It also shows the potential risk to global supply chains and products from China's approach.
“Further developments will be important as 4Q is the peak season for iPhone shipments,” Morgan Stanley analysts wrote. “The potential impact on iPhone production is worth monitoring as Zhengzhou is one of Hon Hai's major production sites, particularly for iPhone assembly.”
It's unclear how many workers were allowed to leave
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