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iPhone production disrupted by Covid-19 restrictions in China

Apple Store - Westfield London
Image source: apple.com

Apple’s most expensive iPhone 14 Pro and Pro Max models are affected by the limited manufacturing capacity of the factories in China because of the Covid-19 outbreak.

Apple Inc. has informed its customers that shipments of its higher-end iPhone models would be obstructed by Covid-19 restrictions at one of the leading suppliers in China. This disruption comes at a particularly inconvenint time as the industry prepares for its most busy holiday shopping season. Currently, the assembly factory in Zhengzhou is still operational but at a reduced capacity according to the information from the tech giant.

“We now expect lower iPhone 14 Pro and iPhone 14 Pro Max shipments than previously anticipated and customers will experience longer waiting times to receive their new products,” the company said.

The company in China that assembles iPhones for Apple, Foxconn Technology Group, entered into a lockdown at its Zhengzhou facility, after attempting to fight against a Covid-19 outbreak for several weeks.

Foxconn tried to create a so-called “closed-loop system” to slow and prevent the spread of Covid, largely shutting off a major number of workers from the outside world, and enclosing others in a particular part of the factory. Some employees refused to return to the factory, concerned about the outbreak, and some were even able to escape from the quarantined section to the outside world.

Apple has stated that it was continually seeing overwhelming demand for its flagship phones but that they are putting the health and safety of the workers as the priority. ‘’We are working closely with our supplier to return to normal production levels while ensuring the health and safety of every worker’’ Apple said.

Foxconn says that it is working with the Chinses government “In concerted efforts to stamp out the pandemic and resume production to its full capacity as quickly as possible.” The company has relocated those employees who are still able to work into special dormitory areas where they live and work and their movement is limited.

This is probably the biggest Covid 19 related disruption of Apple’s operations so far. Previously the tech giant has been more or less able to avoid major supply-chain disruptions and operate in conditions where others had to significantly limit or reduce their operations. Despite challenges caused by the pandemic in the past two years, Apple was able to generate record profits, making investors optimistic about the company’s future, and pushing Apple stock price to new highs. Even though the company’s stock price has seen a slight decline in the last few months because of these supplier issues and the overall world economic downturn, and the smartphone market downfall recently, the stock price is rising again and is currently at 150$ a share, i.e., as high as a year ago.

Apple proves to be quite resilient to the major smartphone market slowdown. The tech giant’s top-priced iPhone models are still greatly demanded by large audiences, with customers queuing to buy models costing over $1,000, such as iPhone 14 Pro and Pro Max. Part of the reason for high sales in the US is that US cell operators are currently actively promoting deals with top-model iPhones to hook up their customers to 5G plans.

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