China has finally ended COVID-19 lockdowns in Shanghai and Zhengzhou, home of the largest iPhone factory in the world. The ease in restrictions is likely to improve labor tensions at production at Foxconn’s iPhone City.
Apple has reportedly suffered heavy losses in revenue due reduction in shipments of iPhone 14 Pro models during the Holiday season because of China’s zero-COVID policy and riots at Foxconn’s Zhengzhou iPhone plant.
iPhone City’s lockdown and labor riots cost Apple $1 billion per week
iPhone 14 Pro exclusive assembler, Foxconn manufactures the smartphone models at its iPhone City in Zhengzhou. Firstly, the shipment volume of iPhone 14 Pro models saw a reduction because the plant’s average capacity utilization rate declined to 20% in November because of the lockdown in Zhengzhou, and later, it was significantly affected by workers’ riots and protests against the closed-loop production system at the plant.
Daniel Ives, managing director of equity research at Wedbush Securities, told CNN Business that the lifting of COVID lockdowns is good news for Apple which has suffered a loss of $1 billion in iPhone sales, approximately.
“This is some good news in a dark storm for Cupertino. There is a lot of heavy lifting ahead for Apple to ramp back up the factories.”
Ives estimates the ongoing supply disruptions at Foxconn’s Zhengzhou campus were costing Apple roughly $1 billion a week in lost iPhone sales. The troubles started in October when workers left the campus in Zhengzhou, the capital of the central province of Henan, due to Covid-related fears. Short on staff, bonuses were offered to workers to return.
Earlier, tech analyst Ming-Chi Kuo also reported that iPhone 14 Pro and iPhone 14 Pro Max shipments will see a further reduction by 15 to 20 million units in Q4, 2022 because of labor tensions at the Foxconn plant. Therefore, overall iPhone revenue is expected to be 20% to 30% lower than the market’s expectation.