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.
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.
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.
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.
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.