- Not So Fast! After 2 Southern States Claim Foxconn Is Coming To Them, Taiwanese Manufacturing Giant Denies Any ‘Definitive’ Agreement — Yet Swarajya
- India roundup: Apple suppliers embark on massive investments in India DIGITIMES
- iPhone-Maker Foxconn Says No ‘Definitive Agreements’ For New India Investment Times Now
- Foxconn’s ‘no definitive pact’ statement stirs row in Telangana, Karnataka The Siasat Daily
- India’s iPhone economy: Where it stands, where it’s headed Economic Times
- View Full Coverage on Google News
Tag Archives: Foxconn
Apple Makes Plans to Move Production Out of China
In recent weeks,
Apple Inc.
AAPL -0.34%
has accelerated plans to shift some of its production outside China, long the dominant country in the supply chain that built the world’s most valuable company, say people involved in the discussions. It is telling suppliers to plan more actively for assembling Apple products elsewhere in Asia, particularly India and Vietnam, they say, and looking to reduce dependence on Taiwanese assemblers led by
Foxconn
2354 4.05%
Technology Group.
Turmoil at a place called iPhone City helped propel Apple’s shift. At the giant city-within-a-city in Zhengzhou, China, as many as 300,000 workers work at a factory run by Foxconn to make iPhones and other Apple products. At one point, it alone made about 85% of the Pro lineup of iPhones, according to market-research firm Counterpoint Research.
The Zhengzhou factory was convulsed in late November by violent protests. In videos posted online, workers upset about wages and Covid-19 restrictions could be seen throwing items and shouting “Stand up for your rights!” Riot police were present, the videos show. The location of one of the videos was verified by the news agency and video-verification service Storyful. The Wall Street Journal corroborated events shown in the videos with workers at the site.
Coming after a year of events that weakened China’s status as a stable manufacturing center, the upheaval means Apple no longer feels comfortable having so much of its business tied up in one place, according to analysts and people in the Apple supply chain.
“In the past, people didn’t pay attention to concentration risks,” said Alan Yeung, a former U.S. executive for Foxconn. “Free trade was the norm and things were very predictable. Now we’ve entered a new world.”
One response, say the people involved in Apple’s supply chain, is to draw from a bigger pool of assemblers—even if those companies are themselves based in China. Two Chinese companies that are in line to get more Apple business, they say, are Luxshare Precision Industry Co. and
Wingtech Technology Co.
On calls with investors earlier this year, Luxshare executives said some consumer-electronics clients, which they didn’t name, were worried about Chinese supply-chain snafus caused by Covid-19 prevention measures, power shortages and other issues. They said these clients wanted Luxshare to help them do more work outside China.
The executives referred to what is known as new product introduction, or NPI, when Apple assigns teams to work with contractors in translating its product blueprints and prototypes into a detailed manufacturing plan.
It is the guts of what it takes to actually build hundreds of millions of gadgets, and an area where China, with its concentration of production engineers and suppliers, has excelled.
Apple has told its manufacturing partners that it wants them to start trying to do more of this work outside of China, according to people involved in the discussions. Unless places such as India and Vietnam can do NPI too, they will remain stuck playing second fiddle, say supply-chain specialists. However, the slowing global economy and slowing hiring at Apple have made it hard for the tech giant to allocate personnel for NPI work with new suppliers and new countries, said some of the people in the discussions.
Apple and China have spent decades tying themselves together in a relationship that, until now, has mostly been mutually beneficial. Change won’t come overnight. Apple still puts out new iPhone models every year, alongside steady updates of its iPads, laptops and other products. It must keep flying the plane while replacing an engine.
“Finding all the pieces to build at the scale Apple needs is not easy,” said Kate Whitehead, a former Apple operations manager who now owns her own supply-chain consulting firm.
Yet the transition is under way, driven by two causes that are feeding on each other to threaten China’s historic economic strength. Some Chinese youth are no longer eager to work for modest wages assembling electronics for the affluent. They are seething in part because of Beijing’s heavy-handed Covid-19 approach, itself a concern for Apple and many other Western companies. Three years after Covid-19 started circulating, China is still trying to crush outbreaks with measures such as quarantines, as many other countries have returned to prepandemic norms.
Zhengzhou, left, is home to a giant Foxconn facility known as iPhone City, where a worker is shown at right disinfecting equipment. Shang Ji/Future Publishing/Getty Images; VCG/Getty Images
Protests in Chinese cities over the past week, during which some demonstrators called for the ouster of President
Xi Jinping,
suggested criticism over Covid-19 restrictions could build into a larger movement against the government.
All this comes on top of more than five years of heightened U.S.-China military and economic tensions under the Trump and Biden administrations over China’s rapidly expanding military footprint and U.S. tariffs on Chinese goods, among other disputes.
Apple’s longer-term goal is to ship 40% to 45% of iPhones from India, compared with a single-digit percentage currently, according to Ming-chi Kuo, an analyst at TF International Securities who follows the supply chain. Suppliers say Vietnam is expected to shoulder more of the manufacturing for other Apple products such as AirPods, smartwatches and laptops.
For now, consumers doing Christmas shopping are stuck with some of the longest wait times for high-end iPhones in the product’s 15-year history, stretching until after Christmas. Apple issued a rare midquarter warning in November that shipments of the Pro models would be hurt by Covid-19 restrictions at the Zhengzhou facility.
In November, as the worker protests in the facility grew, Apple issued a statement assuring it was on the ground looking to resolve the issue. “We are reviewing the situation and working closely with Foxconn to ensure their employees’ concerns are addressed,” a spokesman said at the time.
The risk of too much concentration in China has long been known to Apple executives, yet for years they did little to lessen it. China supplied a literate and diligent workforce, political stability and a huge local market for Apple’s products.
Taiwan-based Foxconn, under founder
Terry Gou,
became an essential link between Apple in California and the Chinese assembly plants where iPhones get put together. Foxconn managers share a language and cultural background with mainland workers.
Pegatron Corp.
, another Taiwan-based contractor, has played a smaller but similar role.
Apple is looking to manufacture more in Vietnam, where a facility of China-based Luxshare, an Apple supplier, is located.
Photo:
Linh Pham/Bloomberg News
And both the government in Beijing and local governments in places such as Henan province, home to the Zhengzhou plant, have enthusiastically supported Apple’s business, seeing it as an engine of jobs and growth.
Even now, when ever-harsher anti-American rhetoric flows each day from Beijing over issues such as Taiwan and human rights, that backing remains strong.
People’s Daily, the mouthpiece of the Chinese Communist Party, hailed the Apple production site in a Nov. 20 video, saying it accounted directly or indirectly for more than a million local jobs. Foxconn shipped about $32 billion in products overseas from Zhengzhou in 2019, according to a Chinese government-linked think tank. All told, the Foxconn group accounted for 3.9% of China’s exports in 2021, according to the company.
“The government’s timely assistance…continuously provides a sense of certainty for multinational companies like Apple, as well as for the world’s supply chain,” the People’s Daily video said.
Yet such words ring hollow to many U.S. businesses in light of stringent anti-Covid measures by the government that have hampered production and roused worker unrest. A survey by the U.S.-China Business Council this year found American companies’ confidence in China has fallen to a record low, with about a quarter of respondents saying they have at least temporarily moved parts of their supply chain out of China over the past year.
To keep operating during government Covid-19 measures, the Zhengzhou factory is among those compelled to adopt a system in which workers stay on-site and contact with the outside world is limited to the bare minimum to keep the goods flowing. Foxconn has sealed smoking areas, switched off vending machines and closed dining halls in favor of carryout meals that workers bring back to their dormitories, often a half-hour walk away, workers said.
Many have escaped, jumping fences and walking along empty highways to get back to their hometowns. In November, the pandemic policies and pay disputes further fueled workers’ grievances. Some clashed with police at the site and left smashed glass doors.
Many of those abandoning the factory were young people who said on social media that they decided wages equivalent to $5 or less an hour weren’t enough to compensate for tedious production work, exacerbated by Covid-19 restrictions.
People protested throughout China this past week, left, against the country’s strict anti-Covid protocols. Beijing residents, right, waited in line to be tested for the disease. Kevin Frayer/Getty Images (2)
“It’s better for us to skate by at home than to be sucked dry by capitalists,” one person who identified herself as a departed Foxconn worker posted on her social-media account after the protests.
Asked for comment, a Foxconn spokesman referred to earlier statements in which the company blamed a computer error for some of the pay issues raised by new hires. It said it guaranteed recruits would be paid what was promised in recruitment ads. The spokesman declined to comment further.
China’s Covid-19 policy “has been an absolute gut punch to Apple’s supply chain,” said Wedbush Securities analyst
Daniel Ives.
“This last month in China has been the straw that broke the camel’s back for Apple in China.”
Mr. Kuo, the supply-chain analyst, said iPhone shipments in the fourth quarter of this year were likely to reach around 70 million to 75 million units, which he said was around 10 million fewer than market projections before the Zhengzhou turmoil. The top-of-the-line iPhone 14 Pro and Pro Max models have been particularly hard-hit, he said.
Accounts vary about how many workers are missing from the Zhengzhou factory, with estimates ranging from the thousands to the tens of thousands. Mr. Kuo said it was running at about 20% capacity in November, a figure expected to improve to 30% to 40% in December. One positive sign came Wednesday, when the local government in Zhengzhou lifted lockdown restrictions.
One Foxconn manager said hundreds of workers were mobilized to move machinery and components by truck and plane nearly 1,000 miles from Zhengzhou in central China to Shenzhen in the south, where Foxconn has its other main factories in China. The Shenzhen factories have made up some, but not all, of the production gap.
Meanwhile, Foxconn is offering money to get workers to come back and stay for a while. One of its offers is a bonus of up to $1,800 for January to full-time workers in Zhengzhou who joined at the start of November or earlier. Those who wanted to quit have gotten $1,400.
India and Vietnam have their own challenges.
People in Beijing protested this past week against stringent anti-Covid measures.
Photo:
Kevin Frayer/Getty Images
Dan Panzica, a former Foxconn executive who now advises companies on supply-chain issues, said Vietnam’s manufacturing was growing quickly but was short of workers. The country has just under 100 million people, less than a 10th of China’s population. It can handle 60,000-person manufacturing sites but not places such as Zhengzhou that reach into the hundreds of thousands, he said.
“They’re not doing high-end phones in India and Vietnam,” said Mr. Panzica. “No other places can do them.”
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India has a population nearly the size of China’s but not the same level of governmental coordination. Apple has found it hard to navigate India because each state is run differently and regional governments saddle the company with obligations before letting it build products there.
“India is the Wild West in terms of consistent rules and getting stuff in and out,” said Mr. Panzica.
The U.S. embassies of India and Vietnam didn’t respond to requests for comment.
Nonetheless, “Apple is going to have to find multiple places to replace iPhone City,” Mr. Panzica said. “They’re going to have to spread it around and make more villages instead of big cities.”
—Selina Cheng contributed to this article.
Write to Yang Jie at jie.yang@wsj.com and Aaron Tilley at aaron.tilley@wsj.com
Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8
China’s Zhengzhou, home to world’s largest iPhone factory, ends Covid lockdown
Hong Kong
CNN Business
—
The central Chinese city of Zhengzhou, home to the world’s largest iPhone factory, has lifted a five-day Covid lockdown, in a move that analysts have called a much-needed relief for Apple and its main supplier Foxconn.
Zhengzhou is the site of “iPhone City,” a sprawling manufacturing campus owned by Taiwanese contract manufacturer Foxconn that normally houses about 200,000 workers churning out products for Apple
(AAPL), including the iPhone 14 Pro and 14 Pro Max. Last Friday, the city locked down its urban districts for five days as Covid-19 cases surged there.
Foxconn’s massive facility is not part of the city’s urban districts. However, analysts say the lockdown would have been detrimental to efforts to restore lost production at the campus, the site of a violent workers’ revolt last week.
“This is some good news in a dark storm for Cupertino,” Daniel Ives, managing director of equity research at Wedbush Securities, told CNN Business, referring to the California city where Apple is based. “There is a lot of heavy lifting ahead for Apple to ramp back up the factories.”
Ives estimates the ongoing supply disruptions at Foxconn’s Zhengzhou campus were costing Apple roughly $1 billion a week in lost iPhone sales. The troubles started in October when workers left the campus in Zhengzhou, the capital of the central province of Henan, due to Covid-related fears. Short on staff, bonuses were offered to workers to return.
But protests broke out last week when the newly hired staff said management had reneged on their promises. The workers, who clashed with security officers, were eventually offered cash to quit and leave.
Analysts said Foxconn’s production woes will speed up the pace of supply chain diversification away from China to countries like India.
Ming-Chi Kuo, an analyst at TF International Securities, wrote on social media that he estimated iPhone shipments could be 20% lower than expected in the current October-to-December quarter. The average capacity utilization rate of the Zhengzhou plant was only about 20% in November, he said, and was expected to improve to 30% to 40% in December.
Total iPhone 14 Pro and 14 Pro Max shipments in the current quarter would be 15 million to 20 million units less than previously anticipated, according to Kuo. Due to the high price of the iPhone 14 Pro series, Apple’s overall iPhone revenue in the current holiday quarter could be 20% to 30% lower than investors’ expectations, he added.
Apple has a huge problem with its supplier’s iPhone factory in China
Hong Kong
CNN Business
—
A violent workers’ revolt at the world’s largest iPhone factory this week in central China is further scrambling Apple’s strained supply and highlighting how the country’s stringent zero-Covid policy is hurting global technology firms.
The troubles started last month when workers left the factory campus in Zhengzhou, the capital of the central province of Henan, due to Covid fears. Short on staff, bonuses were offered to workers to return.
But protests broke out this week when the newly hired staff said management had reneged on their promises. The workers, who clashed with security officers wearing hazmat suits, were eventually offered cash to quit and leave.
Analysts said the woes facing Taiwan contract manufacturing firm Foxconn, a top Apple supplier which owns the facility, will also speed up the pace of diversification away from China to countries like India.
Daniel Ives, managing director of equity research at Wedbush Securities, told CNN Business that the ongoing production shutdown in Foxconn’s sprawling campus in the central Chinese city of Zhengzhou was an “albatross” for Apple.
“Every week of this shutdown and unrest we estimate is costing Apple roughly $1 billion a week in lost iPhone sales. Now roughly 5% of iPhone 14 sales are likely off the table due to these brutal shutdowns in China,” he said.
Demand for iPhone 14 units during the Black Friday holiday weekend was much higher than supply and could cause major shortages leading into Christmas, Ives said, adding that the disruptions at Foxconn, which started in October, have been a major “gut punch” to Apple this quarter.
In a note Friday, Ives said Black Friday store checks show major iPhone shortages across the board.
“Based on our analysis, we believe iPhone 14 Pro shortages have gotten much worse over the last week with very low inventories,” he wrote. “We believe many Apple Stores now have iPhone 14 Pro shortages … of up to 25%-30% below normal heading into a typical December.”
Ming-Chi Kuo, an analyst at TF International Securities, wrote on Twitter that more than 10% of global iPhone production capacity was affected by the situation at the Zhengzhou campus.
Earlier this month, Apple said shipments of its latest lineup of iPhones would be “temporarily impacted” by Covid restrictions in China. It said its assembly facility in Zhengzhou, which normally houses some 200,000 workers, was “currently operating at significantly reduced capacity,” due to Covid curbs.
The Zhengzhou campus has been grappling with a Covid outbreak since mid-October that caused panic among its workers. Videos of people leaving Zhengzhou on foot went viral on Chinese social media in early November, forcing Foxconn to step up measures to get its staff back.
To entice workers, the company said it had quadrupled daily bonuses for workers at the plant this month. A week ago, state media reported that 100,000 people had been successfully recruited to fill the vacant positions.
But on Tuesday night, hundreds of workers, mostly new hires, began to protest against the terms of the payment packages offered to them and also about their living conditions. Scenes turned increasingly violent into the next day as workers clashed with a large number of security forces.
By Wednesday evening, the crowds had quieted, with protesters returning to their dormitories on the Foxconn campus after the company offered to pay the newly recruited workers 10,000 yuan ($1,400), or roughly two months of wages, to quit and leave the site altogether.
In a statement sent to CNN Business on Thursday after the protests had wound down, Apple said it had a team on the ground at the Zhengzhou facility working closely with Foxconn to ensure employees’ concerns were addressed.
Even before this week’s demonstrations, Apple had started making the iPhone 14 in India, as it sought to diversify its supply chain away from China.
The announcement in late September marked a major change in its strategy and came at a time when US tech companies were looking for alternatives to China, the world’s factory for decades.
The Wall Street Journal reported earlier this year that the company was looking to boost production in countries such as Vietnam and India, citing China’s strict Covid policy as one of the reasons.
Kuo said on Twitter that he believed Foxconn would speed up the expansion of iPhone production capacity in India as a result of Zhengzhou lockdowns and resulting protests.
The production of iPhones by Foxconn in India will grow by at least 150% in 2023 compared to 2022, he predicted, and the longer term goal would be to ship between 40% and 45% of such phones from India, compared to less than 4% now.
— Chris Isidore contributed to this report.
Foxconn protests: iPhone factory offers to pay its workers to quit and leave Zhengzhou campus
Hong Kong
CNN Business
—
Foxconn has offered to pay newly recruited workers 10,000 yuan ($1,400) to quit and leave the world’s largest iPhone assembly factory, in an attempt to quell protests that saw hundreds clash with security forces at the compound in central China.
The Apple supplier made the offer Wednesday following dramatic scenes of violent protests on its campus in Zhengzhou, the capital of Henan province, in a text message sent from its human resources department to workers.
In the message, seen by CNN, the company urged workers to “please return to your dormitories” on the campus. It also promised to pay them 8.000 yuan if they agreed to quit Foxconn, and another 2,000 yuan after they board buses to leave the sprawling site altogether.
The protest erupted on Tuesday night over the terms of the new hires’ payment packages and Covid-related concerns about their living conditions. Scenes turned increasingly violent on Wednesday as workers clashed with a large number of security forces, including SWAT team officers.
Videos circulating on social media showed groups of law enforcement officers clad in hazmat suits kicking and hitting protesters with batons and metal rods. Some workers were seen tearing down fences, throwing bottles and barriers at officers and smashing and overturning police vehicles.
The protest largely tailed off around 10 p.m. on Wednesday as workers returned to their dormitories, having received Foxconn’s payment offer and fearing a harsher crackdown by authorities, a witness told CNN.
The Zhengzhou plant was hit by a Covid outbreak in October, which forced it to lock down and led to a mass exodus of workers fleeing the outbreak. Foxconn later launched a massive recruitment drive, in which more than 100,000 people signed up to fill the advertised positions, Chinese state media reported.
According to a document setting out the salary package of new hires seen by CNN, the workers were promised a 3,000 yuan bonus after 30 days on the job, with another 3,000 yuan to be paid after a total of 60 days.
However, according to a worker, after arriving at the plant, the new recruits were told by Foxconn that they would only receive the first bonus on March 15, and the second installment in May – meaning they must work through the Lunar New Year holiday, which starts in January 2023, to get the first of the bonus payments.
“The new recruits had to work more days to get the bonus they were promised, so they felt cheated,” the worker told CNN.
In a statement Thursday, Foxconn said it fully understood the new recruits’ concerns about “possible changes in the subsidy policy,” which it blamed on “a technical error (that) occurred during the onboarding process.”
“We apologize for an input error in the computer system and guarantee that the actual pay is the same as agreed,” it said.
Foxconn was communicating with employees and assuring them that salaries and bonuses would be paid “in accordance with company policies,” it said.
Apple, for which Foxconn manufactures a range of products, told CNN Business that its employees were on the ground at the Zhengzhou facility.
“We are reviewing the situation and working closely with Foxconn to ensure their employees’ concerns are addressed,” it said in a statement.
On Thursday morning, some workers who had agreed to leave had received the first part of the payment, a worker said in a livestream, which showed workers lining up outdoors to take Covid tests while they waited for departing buses. Later in the day, livestreams showed long lines of workers boarding buses.
But for some, the trouble is far from over. After being driven to the Zhengzhou train station, many couldn’t get a ticket home, another worker said in a livestream on Thursday afternoon. Like him, thousands of workers were stuck at the station, he said, as he turned his camera to show the large crowds.
Zhengzhou is set to impose a five-day lockdown in its urban districts, which include the train station, starting from midnight Friday, authorities had announced earlier.
The protest started outside the workers’ dormitories on the sprawling Foxconn campus on Tuesday night, with hundreds marching and chanting slogans including “Down with Foxconn,” according to social media videos and a witness account. Videos showed workers clashing with security guards and fighting back tear gas fired by police.
The stand-off lasted into Wednesday morning. The situation quickly escalated when a large number of security forces, most covered in white hazmat suits and some holding shields and batons, were deployed to the scene. Videos showed columns of police vehicles, some marked with “SWAT,” arriving on the campus, normally home to some 200,000 workers.
More workers joined the protest after seeing livestreams on video platforms Kuaishou and Douyin, the Chinese version of TikTok, the worker told CNN. Many livestreams were cut or censored. Online searches for “Foxconn” in Chinese have been restricted.
Some protesters marched to the main gate of the production facility compound, which is located in a separate area from the workers’ dorms, in an attempt to block assembly work, the worker said.
Other protesters took the further step of breaking into the production compound. They smashed Covid testing booths, glass doors and advertising boards at restaurants in the production area, according to the worker.
Having worked at the Zhengzhou plant for six years, he said he was now deeply disappointed by Foxconn and planned to quit. With a baseline monthly salary of 2,300 yuan, he has been earning between 4,000 yuan to 5,000 yuan per month, including overtime pay, working 10 hours a day and seven days a week during the pandemic.
“Foxconn is a Taiwanese company,” he said. “Not only did it not spread Taiwan’s values of democracy and freedom to the mainland, it was assimilated by the Chinese Communist Party and became so cruel and inhumane. I feel very sad about it.”
Although he was not one of the new recruits, he protested with them in support, adding: “If today I remain silent about the suffering of others, who will speak out for me tomorrow?”
Foxconn apologises for pay-related error at China iPhone plant after worker unrest
TAIPEI/SHANGHAI, Nov 24 (Reuters) – Foxconn (2317.TW) said on Thursday a pay-related “technical error” occurred when hiring new recruits at a COVID-hit iPhone factory in China and apologised to workers after the company was rocked by fresh labour unrest.
Men smashed surveillance cameras and clashed with security personnel as hundreds of workers protested at the world’s biggest iPhone plant in Zhengzhou city on Wednesday, in rare scenes of open dissent in China sparked by claims of overdue pay and frustration over severe COVID-19 restrictions.
Workers said on videos circulated on social media that they had been informed that the Apple Inc (AAPL.O) supplier intended to delay bonus payments. Some workers also complained they were forced to share dormitories with colleagues who had tested positive for COVID.
“Our team has been looking into the matter and discovered a technical error occurred during the onboarding process,” Foxconn said in a statement, referring to the hiring of new workers.
“We apologize for an input error in the computer system and guarantee that the actual pay is the same as agreed and the official recruitment posters.” It did not elaborate on the error.
The apology was an about-face from a day earlier when Foxconn said it had fulfilled its payment contracts.
The unrest comes at a time when China is logging record numbers of COVID-19 infections and grappling with more and more lockdowns that have fuelled frustration among citizens across the country. But it has also exposed communication problems and a mistrust of Foxconn management among some staff.
The largest protests had died down and the company was communicating with employees engaged in smaller protests, a Foxconn source familiar with the matter told Reuters on Thursday.
The person said the company had reached “initial agreements” with employees to resolve the dispute and production at the plant was continuing.
Mounting worker discontent over COVID outbreaks, strict quarantine rules and shortages of food had seen many employees flee the enclosed factory campus since October after management implemented a so-called closed-loop system that isolated the plant from the wider world.
Many of new recruits had been hired to replace the workers who had fled – estimated by some former staff to number thousands.
The Taiwanese company said it would respect the wishes of new recruits who wanted to resign and leave the factory campus, and would offer them “care subsidies”. The Foxconn source said the subsidies amounted to 10,000 yuan ($1,400) per worker.
APPLE RISKS
Home to over 200,000 workers, Foxconn’s Zhengzhou plant has dormitories, restaurants, basketball courts and a football pitch across its sprawling roughly 1.4 million square metre facility.
The factory makes Apple devices including the iPhone 14 Pro and Pro Max, and accounts for 70% of iPhone shipments globally.
Apple said it had staff at the factory and was “working closely with Foxconn to ensure their employees’ concerns are addressed”.
Several shareholder activists told Reuters the protests showed the risks Apple faces through its reliance on manufacturing in China.
“The extreme dependence of Apple on China, both as a (consumer) market and as its place of primary manufacturing, we see that a very risky situation,” said Christina O’Connell, a senior manager for SumOfUs, a nonprofit corporate accountability group.
Reuters reported last month that iPhone output at the Zhengzhou factory could slump by as much as 30% in November and that Foxconn aimed to resume full production there by the second half of the month.
The Foxconn source familiar with the matter said it was not immediately clear how much impact the worker protests might have on production for November and that it might take a few days to work that out, citing the large size of the factory.
A separate source has said the unrest had made it certain that they would not be able to resume full production by month-end.
Apple has warned it expects lower shipments of premium iPhone 14 models than previously anticipated.
($1 = 7.1353 Chinese yuan)
Reporting by Yimou Lee in Taipei and Brenda Goh in Shanghai; Additional reporting by Ross Kerber in Boston, Beijing Newsroom and Yew Lun Tian; Editing by Anne Marie Roantree, Stephen Coates and Edwina Gibbs
Our Standards: The Thomson Reuters Trust Principles.
Zhengzhou, China: Protesters at Foxconn factory clash with police, videos show
Beijing/Hong Kong
CNN Business
—
Workers at China’s largest iPhone assembly factory were seen confronting police, some in riot gear, on Wednesday, according to videos shared over social media.
The videos show hundreds of workers facing off with law enforcement officers, many in white hazmat suits, on the Foxconn campus in the central Chinese city of Zhengzhou. In the footage, now blocked, some of the protesters could be heard complaining about their pay and sanitary conditions.
The scenes come days after Chinese state media reported that more than 100,000 people had signed up to fill positions advertised as part of a massive recruitment drive held for Foxconn’s Zhengzhou plant.
Apple
(AAPL) has been facing significant supply chain constraints at the assembly facility and expects iPhone 14 shipments to be hit just as the key holiday shopping season begins. CNN has contacted the company for comment on the situation at the plant.
A Covid outbreak last month had forced the site to lock down, leading some anxious factory workers to reportedly flee.
Videos of many people leaving Zhengzhou on foot had gone viral on Chinese social media earlier in November, forcing Foxconn to step up measures to get its staff back. To try to limit the fallout, the company said it had quadrupled daily bonuses for workers at the plant this month.
On Wednesday, workers were heard in the video saying that Foxconn failed to honor their promise of an attractive bonus and pay package after they arrived to work at the plant. Numerous complaints have also been posted anonymously on social media platforms — accusing Foxconn of having changed the salary packages previously advertised.
In a statement in English, Foxconn said Wednesday that “the allowance has always been fulfilled based on contractual obligation” after some new hires at the Foxconn campus in Zhengzhou appealed to the company regarding the work allowance on Tuesday.
Workers were also heard in the videos complaining about insufficient anti-Covid measures, saying workers who tested positive were not being separated from the rest of the workforce.
Foxconn said in the English statement that speculation online about employees who are Covid positive living in the dormitories of the Foxconn campus in Zhengzhou is “patently untrue.”
“Before new hires move in, the dormitory environment undergoes standard procedures for disinfection, and it is only after the premise passes government check, that the new employees are allowed to move in,” Foxconn said.
Searches for the term “Foxconn” on Chinese social media now yield few results, an indication of heavy censorship.
“Regarding violent behaviors, the company will continue to communicate with employees and the government to prevent similar incidents from happening again,” Foxconn said in a statement in Chinese.
The Zhengzhou facility is the world’s largest iPhone assembly site. It typically accounts for approximately 50% to 60% of Foxconn’s global iPhone assembly capacity, according to Mirko Woitzik, global director of intelligence solutions at Everstream, a provider of supply chain risk analytics.
Apple warned earlier this month of the disruption to its supply chain, saying that customers will feel an impact.
“We now expect lower iPhone 14 Pro and iPhone 14 Pro Max shipments than we previously anticipated,” the tech giant said in a statement. “Customers will experience longer wait times to receive their new products.”
As of last week, the wait time for those models had reached 34 days in the United States, according to a report from UBS.
Public frustration has been mounting under China’s unrelenting zero-Covid policy, which continues to involve strict lockdowns and travel restrictions nearly three years into the pandemic.
Last week, that sentiment was on display as social media footage showed residents under lockdown in Guangzhou tearing down barriers meant to confine them to their homes and taking to the streets in defiance of strictly enforced local orders.
— Michelle Toh, Simone McCarthy, Wayne Chang, Juliana Liu, and Kathleen Magramo contributed to this report.
Chinese cities brace for wave of Foxconn workers from COVID-hit Zhengzhou
BEIJING, Oct 30 (Reuters) – Cities in central China hastily drew up plans to isolate migrant workers fleeing to their hometowns from a vast assembly facility of iPhone maker Foxconn (2317.TW) in COVID-hit Zhengzhou, fearing they could trigger coronavirus outbreaks.
Zhengzhou, capital of central
Henan province, reported 167 locally transmitted COVID-19 cases in the seven days to Oct. 29, up from 97 infections in the prior seven-day period.
Apple (AAPL.O) supplier Foxconn, based in Taiwan, currently has about 200,000 workers at its Zhengzhou complex and has not disclosed the number of infected workers, but said on Sunday that it would not stop workers from leaving.
Late on Saturday, cities near Zhengzhou, including Yuzhou, Changge and Qinyang, urged Foxconn workers to report to local authorities in advance before heading home.
Returning workers are to travel “point-to-point” in pre-arranged vehicles and are to be quarantined on arrival, they said in separate letters on their respective social media accounts addressed to Zhengzhou Foxconn workers.
Under China’s ultra-strict zero-COVID policy, cities are mandated to act swiftly to quell any outbreaks, with measures that could include full-scale lockdowns. On Oct. 19, Foxconn banned all dine-in at canteens and required workers to take their meals in their dormitories.
“The government agreed to resume dine-in meals to improve the convenience and satisfaction of employees’ lives,” Foxconn told Reuters in an emailed reply to queries on Sunday.
“At the same time, for some employees who want to return home, the (plant) is cooperating with the government to organise personnel and vehicles to provide a point-to-point orderly return service for employees from today.”
Disruptions from China’s COVID policies to commerce and industry have intensified in recent weeks as cases multiplied. Shanghai Disneyland said on Saturday it would operate at reduced capacity. On Wednesday, Universal Beijing Resort was suspended after the visit of one infected individual.
“We are very aware that under the current situation, it is a protracted battle,” Foxconn said.
But the situation was gradually coming under control, it said, and Foxconn would coordinate back-up production capacity with its other plants to reduce any potential impact.
Apple did not immediately reply to a Reuters request for comment on the Foxconn situation.
‘I COULDN’T HELP BUT FEEL SAD’
Foxconn did not respond to Reuters questions on how many cases had been detected at its Zhengzhou plant and how many workers had left.
Photographs and videos circulating on Chinese social media since Saturday showed Foxconn workers, apparently returning home, trekking across fields in the day and along roads at night. Reuters could not immediately verify the authenticity of the posts.
In a show of support, residents in the vicinity left bottled water and provisions next to roads with signs such as: “For Foxconn workers returning home”, according to social media posts.
“Some people were walking amid wheat fields with their luggage, blankets and quilts,” wrote a user of WeChat in a post about the social media images.
“I couldn’t help but feel sad.”
Reporting by Ryan Woo and Ziyi Tang; Editing by Edmund Klamann and Nick Macfie
Our Standards: The Thomson Reuters Trust Principles.
Inside a Chinese iPhone Plant, Foxconn Grapples With Covid Chaos
HONG KONG—
Foxconn Technology
2354 -0.76%
Group is scrambling to contain a weekslong Covid-19 outbreak at an iPhone factory in central China, trying to appease frightened and frustrated workers during a crucial period for smartphone orders.
In Foxconn’s main Zhengzhou facility, the world’s biggest assembly site for
Apple Inc.’s
AAPL 7.56%
iPhones, hundreds of thousands of workers have been placed under a closed-loop system for almost two weeks. They are largely shut off from the outside world, allowed only to move between their dorms or homes and the production lines.
Many said they have been confined to their quarters for days and that distribution of food and other essentials has been chaotic. Many others say they are too scared to carry on working because of the risk of getting infected.
Foxconn on Wednesday denied what it said were online rumors that 20,000 cases had been detected at the site and said that for “the small number of employees affected by the pandemic,” it is providing necessary supplies.
“A sudden outbreak disrupted our normal life,” Foxconn said Friday in a post to its workers on
WeChat,
a social-media platform. “An orderly progress in both pandemic prevention and output depends on the efforts of all staff,” it said. It outlined plans to ensure proper food supplies and mental well-being support and pledged to respond to workers’ concerns.
Asked about the workers’ details of the situation at the site, Foxconn didn’t respond. Earlier when asked about the situation, the company referred to its Wednesday statement as well as to its Friday post on WeChat.
“It’s too dangerous to go to work,” a 21-year-old worker who has been confined to his dorm told The Wall Street Journal, saying that he was skeptical about the company’s claim that there was a low level of infections at the plant.
The disruption at Foxconn is the latest example of the economic and societal toll from China’s rigid pandemic control policies—which include swift and sweeping lockdowns, mass testing and compulsory quarantines to crush the virus whenever it appears. While Beijing says the virus is too potent to allow any easing of its zero-Covid policy, businesses must convince their employees that there is little risk coming to work when there are signs of an outbreak.
Zhengzhou’s flare-up—95 cases recorded in the city the past four days—began in early October, after people returned from other parts of the country from a one-week national holiday. At the first signs of Covid in the city, officials locked down some districts and began rounds of mass testing to stamp out the virus before it gained a foothold among Zhengzhou’s 12.7 million residents. As a major employer, Foxconn joined the campaign.
When more infections emerged at Foxconn midmonth, the company sought to maintain output by creating a “bubble” around its operations to lower the risk of exposure, a practice now common among major manufacturers in China to continue their business during a local outbreak.
Foxconn says it employs as many as 300,000 workers in Zhengzhou. Analysts estimate that the company produces half or more of Apple’s smartphones in the city, making it vital for delivering iPhones to consumers, including for the coming winter holiday season when demand for the handsets typically spikes.
Foxconn, in its statement on Wednesday, said that production at the site is “relatively stable” and that it is sticking to its operating outlook for the current quarter as the impact from the outbreak is controllable. It is set to report quarterly results Nov. 10.
Apple, in its quarterly earnings release Thursday, didn’t mention Foxconn’s Zhengzhou plant. Its chief financial officer said that supply is constrained for the new iPhone 14 Pro models due to strong demand.
Apple didn’t respond to requests for comment about conditions at the Foxconn plant.
Some workers interviewed by the Journal said many colleagues had refused to go back to the production lines. Others had simply left, they said, sometimes abandoning their belongings.
On Sunday, a state-run newspaper in Henan published official notices from various parts of the province welcoming their people to return, with quarantine protocols laid out.
Over the weekend, videos geotagged near the Foxconn site went viral on China’s social-media platforms, recording groups of people walking on highways or through farm fields carrying suitcases and backpacks. Other footage showed makeshift stations set up by local residents offering bottles of water in front of handwritten signs to support migrant Foxconn workers leaving for home.
Foxconn said in a statement Sunday that the situation is coming under control with help from authorities. The company said it is organizing transportation for workers who wish to return home and is coordinating production capacity with its plants elsewhere to minimize disruption. There is no shortage of medical supplies or daily necessities at the facility, it said.
Earlier on Friday, the company had posted a video on WeChat urging people to return to work. “The company needs people,” said a woman’s voice over footage of workers stepping off a bus. “If nobody comes to work, how can the company run?”
Another Foxconn employee said most of his dozen-strong team of night-shift workers had either been taken to a quarantine facility or had refused to return to work. Every night, he said, he saw workers covered in protective gear waiting to be taken away by bus.
“I don’t know who around me is a positive case,” said the worker, who has been confined to his dorm for a few days. “I’d be better off staying in the dorm.”
With so many stuck inside their quarters, sent to quarantine centers or simply absent from work, the pace of production at some assembly lines has slowed, two of the workers said.
Foxconn has created incentives to maintain production, according to Friday’s company notice.
Anyone turning up for work will get free meals and a daily bonus, it said. Those turning up every working day from Oct. 26 to Nov. 11 will get an award of 1,500 yuan, or about $200.
The 21-year-old employee who spoke to the Journal and who worked on an assembly line making an older iPhone version, said he had been confined to his quarters since Oct. 17, along with thousands of others.
Over the following days, meal deliveries were delayed and garbage was left unattended in the hallways, piling up on the ground floor as more dorms were locked down, he said.
A daughter of one worker said her mother was placed in the same dorm as some who tested positive. Some other workers made similar complaints.
Around 10 days ago, almost 300 employees from Foxconn suppliers were asked to move out of their dormitories and sleep in the factory, one of them said.
In photos he shared with the Journal, people slept on bedding and pillows placed on metal bed frames, under white fluorescent lights suspended from the hangar-like roof. Hygiene has become a problem, he said. Still, he said he isn’t supposed to leave the plant—and has nowhere to go if he did.
“Where can I go? Barriers are everywhere,” he said. “There are people manning every checkpoint.”
Write to Wenxin Fan at Wenxin.Fan@wsj.com and Selina Cheng at selina.cheng@wsj.com
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Apple iPhone maker Foxconn says it wants to make cars for Tesla
Young Liu, chairman of Foxconn Technology Group, speaks in front of a Model C electric vehicle during an event in Taipei, Taiwan, on Tuesday, Oct. 18, 2022. Liu said he hopes one day that Foxconn can make cars for Tesla.
I-Hwa Cheng | Bloomberg | Getty Images
Foxconn, the biggest assembler of Apple’s iPhones, wants to one day build cars for Tesla, the company’s CEO said, as it pushes further into electric vehicle manufacturing.
Hon Hai Technology Group, Foxconn’s official name, launched two electric vehicle prototypes on Tuesday — the Model V pickup truck and Model B sports crossover hatchback.
But Foxconn doesn’t want to sell its own-brand cars. Instead it wants to design and manufacture vehicles for other automakers. The company claims that it can cut the design time of a car in half and reduce the development cost by a third for an automaker wanting to use its services.
The Taiwanese firm has big ambitions. Young Liu, CEO and chairman of Foxconn, said on Tuesday that the company is targeting 5% market share globally of electric vehicle manufacturing by 2025, adding that he hopes Tesla will be a customer.
“I hope one day we can do Tesla cars for Tesla,” Liu said.
Tesla currently manufactures its own cars at its factories around the world — in its U.S. locations and in Berlin and Shanghai.
Elon Musk’s Tesla was not immediately available for comment when contacted by CNBC.
Over the past two years, Foxconn has been ramping up its electric vehicle business.
Last year, the company unveiled three prototype cars. Two of those are currently on the roads. The Model T electric bus is part of the public transportation system in Taiwan and the Model C is a production vehicle branded as the Luxgen n7 by Taiwanese automaker Yulon Motor.
Liu said he wants Foxconn’s customers to sell “a lot of EVs.”
Foxconn has built its business over the last few decades in consumer electronics manufacturing and assembly. But the company is now trying to diversify into new areas, with electric cars a key focus.
The five concept cars show that Foxconn “can design and build EVs that are good-looking and can stand up to safety,” Liu said.
Part of its current strategy is to show off its capabilities in the electric vehicle space at a time when many companies, in particular firms that have not traditionally been in the auto space, are jumping into the market.
In China for example, smartphone maker Xiaomi and internet firm Baidu, have launched electric car companies with an aim to mass produce vehicles.
Foxconn could be an option for companies looking to launch electric car ventures without the need to sink huge investments into own design and manufacturing ventures.