China locks down ‘iPhone City’ for 7 days on COVID cases, slamming the breaks on Apple production ahead of the holiday season - Fortune

The lockdown volition past until Nov. 9, the section authorities said successful a statement posted to its WeChat account. It ordered radical and vehicles disconnected the streets but for aesculapian oregon different indispensable reasons, a prohibition that threatens to chopped disconnected the travel of further workers and components needed to rev up accumulation up of the holiday-season crush.

The abrupt enactment reflects Beijing’s Covid Zero attack and is apt to further disrupt Foxconn’s main operations base, which cranks retired an estimated 4 retired of 5 of Apple Inc.’s latest handsets. The Taiwanese company, whose main listed limb is Hon Hai Precision Industry Co., was already grappling with a Covid flare-up that forced immoderate of its 200,000 unit into quarantine and pushed others to fly the installation — immoderate connected foot.

The authorities announcement emerged aft Zhengzhou reported Covid-19 cases jumped to 359 for Tuesday, up much than three-fold from a time before. Officials determination person successful caller days progressively imposed a web of smaller lockdowns and restrictions connected areas arsenic tiny arsenic an flat block.

The works volition support operating wrong a “closed loop,” oregon a self-contained bubble that limits interaction with the extracurricular world, Foxconn said successful a statement. But the institution didn’t code questions astir however it volition vessel goods successful and retired of the compound during the area-lockdown. An Apple typical didn’t instantly respond to a petition for comment.

The lockdown comes astatine a important clip for Apple, which launched the iPhone 14 during an unprecedented slump successful planetary electronics demand. While faring amended than different smartphone makers, the institution has backed disconnected plans to summation accumulation of its caller iPhones this twelvemonth aft an anticipated surge successful request failed to materialize, Bloomberg has reported. Apple has posted better-than-expected results but warned of a vacation slowdown.

Foxconn has sought to mitigate the imaginable disruption by raising wages and arranging for backup from its different Chinese plants should assembly lines stall successful Zhengzhou. In caller days, it’s besides fought to quell speculation connected societal media that immoderate of the infected unit had died.

In erstwhile lockdowns, authorities officials person allowed not conscionable indispensable services but besides cardinal section enterprises to enactment astir Covid restrictions. Many important companies successful Shanghai and the confederate metropolis of Shenzhen, for instance, continued operating adjacent erstwhile different factories were starved of manufacturing components. 

The Zhengzhou mill should besides person stockpiled capable components to support operating for a while, truthful overmuch would beryllium connected the magnitude of the lockdown — officials elsewhere successful China person sometimes extended specified actions for months. 

It’s unclear if Foxconn has negotiated workarounds with the section authorities successful Zhengzhou. Any disruption determination threatens to snarl Apple’s finely orchestrated proviso chain. Thousands of components from Europe to Asia are shipped into Zhengzhou, assembled manually into devices, past shuttled disconnected to the remainder of the world.

That azygous installation is liable for 80% of capableness for the iPhone 14 series, with much than 85% of iPhone 14 Pro capableness based there, according to Counterpoint elder expert Ivan Lam.