World’s largest iPhone factory bounces back from Covid disruption that hurt Apple

By Wayne Chang and Juliana Liu, CNN

Hong Kong CNN  —  Production at the world’s biggest iPhone factory, disrupted since October by China’s Covid-19 restrictions and worker protests, is now running at nearly full capacity, according to a Chinese state media report.

The sprawling campus in central China, owned by Apple (AAPL) supplier Foxconn, was running at 90% of planned production capacity at the end of December, the Henan Daily newspaper reported Tuesday. It cited an interview with Wang Xue, deputy general manager of the facility, which is also known as iPhone city.

“At the moment, the order books look good, and the orders will peak from now until a few months after Chinese New Year,” he was quoted as saying. The Lunar New Year will begin on January 22.

Foxconn hasn’t yet responded to CNN’s request for comment about the report.

The company said last month it was working on restoring production, which had been badly affected by supply disruptions caused by Covid restrictions. Wedbush Securities analyst Daniel Ives estimated in November that the disruptions in Zhengzhou had been costing Apple roughly $1 billion a week in lost iPhone sales.

According to a UBS report in November, the wait time for the latest 14 Pro and 14 Pro Max in the United States touched 34 days just before the Christmas holidays because of supply chain constraints in China. The UBS analyst called the wait time “extreme.”

The Henan Daily separately quoted an executive responsible for Foxconn’s logistics as saying that, in the first two days of January, the volume of inbound and outbound shipments had reached the highest level in a year.

The report of a nearly full resumption of production comes one month after China abruptly ended three years of pandemic controls, setting off a huge wave of Covid infections.

According to a report in the Wall Street Journal, a letter from Foxconn founder Terry Gou played a major role in persuading Chinese leaders to accelerate plans to dismantle the country’s Covid-19 policies. Gou was quoted as warning that strict Covid controls would threaten China’s central position in global supply chains.

Gou’s office told CNN that it “denies the report and its contents.”

Wang was quoted by the Henan Daily as saying iPhone City currently had about 200,000 workers on site. The employees were each eligible for a maximum of 13,000 yuan ($1,883) per month in bonuses, he said, without specifying their base salaries.

The troubles for Foxconn started in October when workers left the campus, located in the central Chinese province of Henan, because of concerns about Covid-related working conditions and shortages of food. Short on staff, bonuses were offered to workers to return.

But violent protests broke out in November when the newly-hired staff said management reneged on their promises. Workers clashed with security officers, before the company eventually offered them cash to quit and leave the site.

Analysts said the production woes at iPhone City would speed up the pace of Apple’s supply chain diversification away from China.

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