The news: COVID-19 outbreaks have intensified in China, and Foxconn factory workers fearing contagion have resorted to fleeing iPhone factories for safety reasons.
Hundreds of millions locked down: The recent coronavirus surges have led to various lockdown measures as part of China’s zero-COVID policies. More than 232 million Chinese residents in various cities are currently restricted from going outdoors, per Deadline.
Authorities in Guangzhou said they faced a “dire and complicated” outbreak as cases rose sharply in the southern Chinese city Tuesday.
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Workers in Zhengzhou have been locked in for days at Foxconn’s biggest iPhone factory, which employs 200,000 people and produces 60% of all iPhones.
- Employees reportedly climbed fences and fled on foot after reports of COVID-19 spikes in the facility.
- Foxconn refuted widespread reports that 20,000 of its staff had been diagnosed with COVID-19, per Reuters.
- Nikkei Asia reported that Foxconn is sharply increasing attendance bonuses for workers in the Zhengzhou facility from 100 yuan ($13.75) to 400 yuan ($54.96).
- Foxconn workers who complete “full attendance”—meaning no days off, no tardiness, and working at least eight hours a day—will get a 15,000 yuan bonus, per Nikkei Asia.
The zero-COVID policy is fraying: Coronavirus-related shutdowns have been a major reason for China’s economic downturn and could also lead to civic unrest.
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The lockdowns are likely costing the country at least 335 million yuan ($46 million) a month, or 3.1% of GDP, in lost economic output according to economists at the Chinese University of Hong Kong.
- As of October 27, 31 cities are under some form of lockdown, accounting for one in six people in China and 24.5% of its gross domestic product, per Bloomberg.
- Factory workers are also starting to defy the lockdown rules as evidenced by the escape of Foxconn workers.
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Apple has already moved some of its production to India. JP Morgan forecasts that nearly 25% of all Apple products will be manufactured outside of China by 2025, compared with 5% at present.
The struggle to meet iPhone demand: Foxconn is struggling to overcome coronavirus outbreaks and government-mandated lockdown measures to keep iPhone production numbers up. While it may be the highest-profile manufacturer getting the attention, it’s likely many other manufacturers are taking a similar hit.
- Foxconn has said it is working to mitigate any disruption by asking factories in other locations to come up with backup plans.
- The manufacturer is prioritizing production of iPhone 14 Pro and 14 Pro Max, which are the more premium iPhone models.
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iPhone production could decrease by 30% in the factory at a time when it is expected to be in peak production to meet holiday demand.
This article originally appeared in Insider Intelligence'sConnectivity & Tech Briefing—a daily recap of top stories reshaping the technology industry. Subscribe to have more hard-hitting takeaways delivered to your inbox daily.