The world’s largest iPhone factory recovers from the Covid disruption that hurt Apple | CNN Business

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CNN
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Production at the world’s largest iPhone factory, halted since October by Covid-19 restrictions and worker protests in China, is now operating at nearly full capacity, according to a Chinese official. state media reporting.

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

“The order books look good at the moment, with orders peaking between now and a few months after Chinese New Year,” he said. The Lunar New Year will begin on January 22.

Foxconn has not yet responded to CNN’s request for comment on the report.

The company said last month it was working to restore production, which had been badly hit by supply disruptions caused by Covid restrictions. Wedbush Securities analyst Daniel Ives estimated in November that the outages 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 last 14 Pro and 14 Pro Max in the United States hit 34 days just before the Christmas holiday due to supply chain constraints in China. The UBS analyst called the wait time “extreme”.

The Henan Daily separately quoted an executive in charge of Foxconn 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 an almost full resumption of production comes a month after China abruptly ended three years of pandemic controls, sparking a huge wave of Covid infections.

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

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

Wang was quoted by the Henan newspaper as saying that iPhone City currently had about 200,000 workers at the site. All employees were eligible for up to 13,000 yuan ($1,883) per month in bonuses, he said, without specifying their base salaries.

Trouble for Foxconn began in October when workers walked off the campus, located in central China’s Henan province, over concerns about Covid-19-related working conditions and food shortages . Short of staff, bonuses were offered to workers to return.

But violent protests erupted in November when newly hired staff said management reneged on their promises. The workers clashed with security officers, before the company finally offered them cash to leave the site.

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