China lifts controls on Foxconn, Apple was losing a lot of money

The city of the iPhone is unknown. Fearing new unrest, China opted to lift restrictions on the Foxconn factory in Zhengzhou. With this relief, Beijing will primarily try to restart iPhone production for the year-end celebrations.

China announced the end of the lockdown in Zhengzhou, nicknamed the iPhone city, from Thursday, December 1, 2022. Indeed, there is a huge Foxconn factory where most of the iPhones sold in the world are manufactured. Imprisonment has also been abolished in several other cities, including Shanghai.

The end of the safeguards will allow Foxconn ending the closed loop system. This system, which was implemented to prevent the spread of the coronavirus, forced workers to live in the factory. To continue working, workers had to stay in dormitories and take their meals inside the infrastructure.

After several weeks of detention and over promised and unpaid bonuses, workers violently rioted at Foxconn in late November. Protesters clashed with Chinese police forces. Returning to the wall, Foxconn was forced to cease operations.

After that, several thousand workers, mainly hired during the autumn period, left the factory. according to our colleagues from CNNChinese authorities preferred relax the restrictions to prevent new flooding and allow Foxconn to restart production.

Also read: Almost had an Apple Pencil on the iPhone, canceled at the last minute?

Holiday iPhone shortage

Unsurprisingly, the turmoil at Foxconn has affected iPhone production. According to a source familiar with the matter Reuters, Factory production in China fell by 30% during the month of November. In turn, Wedbush Securities analyst Daniel Ives estimates that the outages cost Apple a billion dollars a week. Hence the end of the detention in Zhengzhou good news » Although there is still a lot of work to be done for the company to restart production, Ives assures.

The unrest should help exacerbate the shortage of the brand’s latest flagship, the iPhone 14 Pro, above all else. According to another influential analyst Ming-Chi Kuo, overall iPhone sales in the fourth quarter will fall 20% below initial estimates. The expert trusts a maximum of 75 million iPhones were sold during the periodwhich is 10 million less than expected.

As for the iPhone 14 Pro and Pro Max, Apple needs to sell 15-20 million less than expected”. This drop is very undesirable for the Cupertino group. Indeed, the Californian brand generally achieves its best sales during the holiday season. As a result, Ming-Chi Kuo believes this Apple’s profit will be 20-30% less provided that.

Foxconn decided to restart the machine at any costsuggest a new one bonus to workers remaining in the factory. Bloomberg reports that the Taiwanese firm actually promised $1,800 in bonuses to workers who agreed to stay at their jobs. Foxconn also drew other bonuses for hiring new workers. The company is now offering a reward of 1,000 yuan, or about 135 euros, to employees who refer a loved one.

China is easing restrictions

Removing the save icon Easing of Chinese policy “zero Covid”. Faced with demonstrations in several major cities, including Beijing, Shanghai, Canton or Wuhan, the Communist Party agreed to change its position. Most regions have been exempted from some restrictions, except for some areas considered risky.

For ANZ Research analysts, China is gradually a A ‘living with Covid’ strategy, as indicated by new rules that allow people to be isolated at home instead of being transported to quarantine centres.

Source:

CNN

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