According tomedia outlet Apple Insider, Apple analyst Guo Mingyu believes there is a lot of uncertainty in China’s iPhone production as the coronavirus epidemic continues to spread, adding that he has detailed what he has seen so far in Apple suppliers Foxconn and Shuo. In addition to Foxconn and Hesuk, the entire supply chain is likely to be affected by the outbreak, Mr. Guo said in a report.
According to Mr Guo, Zhengzhou Foxconn is the most critical iPhone manufacturer and is responsible for most of the iPhone 11 and iPhone 11 Pro assembly. It is not clear when the plant will resume work, and Mr Guo thinks it will resume at a rate of 40-60 per cent. In addition, the Shenzhen plant will also be affected. Mr. Guo saw that most of the iPhone 12 development work was going on there, although the research and development team didn’t stop working. However, the return of workers to work has also been affected, with the rate estimated at 30 to 50 per cent.
Mr Guo asserts that some production has been transferred to India and Taiwan, but that the plants have “limited capacity”.
In addition, Hutchison has two key and affected plants. For the first time, its Shanghai plant reopened on February 3rd, with a resumption rate of about 90 per cent. However, Mr Guo expects many to resign, reducing the number of employees to about 60 per cent after the February pay cut. Mr. Guo speculated that Hutchison’s plant in Kunshan would be responsible for “iPhone SE 2 production”. The initial production start date was set for February 10, but this date has been postponed. The resumption rate is expected to reach 40 to 60 per cent before the Spring Festival holiday.
While the continued growth of the coronavirus outbreak will hurt Apple’s business to an extent that is currently unknown, the main blow to the company will be in production rather than retail. Apple products are mainly produced in China, a major country affected by the outbreak, and assembly partners are taking steps to minimize their impact.
Foxconn, for example, had previously said it would prepare to meet its production obligations by the end of January. Foxconn, along with other companies in Apple’s supply chain, has a factory in Wuhan. The company had planned to return to production on February 10, but also contacted employees to warn them not to resume work on that date. The company has also taken steps to keep rework workers in quarantine for up to two weeks to prevent further infections.
The report also showed that local officials prevented Foxconn from returning to work after inspections, and worried about the large number of employees and poor air circulation. Local authorities denied the reports and suggested discussions with the company on Sunday, including plans to reduce the spread of the coronavirus.
On a January 28 conference call for Apple’s financial results, Tim Cook, Apple’s chief executive, said the company had “very closely collected and monitored many data points”. Cook also proposed the existence of “alternative procurement and contingency plans” for factories in the affected areas, and acknowledged that delays in the resumption of plant work had been incorporated into its guidelines.