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China locks down area around Foxconn’s ‘iPhone City’ plant

China has ordered a seven-day lockdown of the area around Foxconn Technology Group’s main plant in Zhengzhou, a move that will severely curtail shipments in and out of the world’s largest iPhone factory.

The lockdown will last until Nov. 9, the local government said in a statement posted to its WeChat account. No vehicles are allowed to operate except for those carrying necessities, the government said. The notice emerged after Zhengzhou reported Covid-19 cases jumped to 359 for Tuesday, up from 95 the day before.

The abrupt action reflects Beijing’s Covid Zero approach to stamping out outbreaks, and is likely to further disrupt Foxconn’s main operations base. The Taiwanese company, whose main listed arm is Hon Hai Precision Industry Co., is grappling with a Covid flare-up that forced some of its 200,000 staff into quarantine and pushed others to flee the facility — some on foot. The lockdown will complicate efforts to recruit and bring in new staff as well as ship production materials to keep operations going.

Representatives for Foxconn and Apple Inc. didn’t immediately respond to requests for comment.

Foxconn has sought to mitigate the potential disruption by raising wages and arranging for backup from its other Chinese plants should assembly lines stall in Zhengzhou. In recent days, it’s also fought to quell speculation on social media that some of the infected staff had died.

The lockdown comes at a crucial time for Apple, which launched the iPhone 14 during an unprecedented slump in global electronics demand. While faring better than other smartphone makers, the company has backed off plans to increase production of its new iPhones this year after an anticipated surge in demand failed to materialize, Bloomberg has reported. Apple has reported better-than-expected results but warned of a holiday slowdown.

Foxconn’s Zhengzhou facility is responsible for 80% of capacity for the iPhone 14 series, with more than 85% of iPhone 14 Pro capacity based there, according to Counterpoint senior analyst Ivan Lam. Any disruption there threatens to snarl Apple’s finely orchestrated supply chain. Thousands of components from Europe to Asia are shipped into Zhengzhou, assembled manually into devices, then shuttled off to the rest of the world. Bloomberg

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