Apple analyst Ming-Chi Kuo reported that Foxconn is postponing an earlier plan to reduce iPhone plant production before the year ends. The heightened COVID-19 restrictions imposed in Foxconn’s iPhone plant made the company change its original reduction, scheduled from November to December.
Foxconn Delays Reduction of iPhone Plant Production
In a series of tweets, Kuo said that Foxconn’s original plan to reduce iPhone production in November and December needs to be postponed. The company is currently dealing with changes brought about by its closed-loop production arrangement. A recent outbreak of the novel coronavirus in October has severely affected Foxconn’s iPhone production plant in Zhenzhou, China. Foxconn had to implement new restrictions to prevent further spread of the virus. This affected the factory’s production of new iPhone units.
As earlier reported, Foxconn workers in its iPhone plant had to cope with the sudden reimposition of closed-loop production. This keeps workers on-site to minimize external contact. Foxconn workers also had to take their meals inside their dorms. Kuo said that this affected 10% of the global iPhone production capacity.
Heightened COVID-19 Restrictions Should Not Affect iPhone Shipments
Despite the current situation in Foxconn’s largest iPhone plant, Kuo believes the iPhone supply chain should remain unaffected.
It’s expected that Foxconn’s production capacity will gradually improve within a few weeks, and there should be a limited impact on the 4Q22 iPhone shipments.
Kuo expects only a limited impact on iPhone 14 4Q22 shipments because of the situation. Nevertheless, he suggests suppliers should improve the efficiency of working in a closed-loop production. With China’s target of attaining normal status regarding COVID-19 infection, suppliers have no choice but to work around the closed-loop production scheme.
On a related note, Apple is reportedly talking with Pegatron and Luxshare ICT to switch their iPhone 14 and iPhone 14 Plus production line to iPhone 14 Pro and Pro Max. Originally, Luxshare was to start shipping the iPhone 14 Pro by 1Q23. However, this reportedly has to change since the demand for the iPhone 14 and iPhone 14 Plus was not as strong as that for the iPhone 14 Pro and Pro Max.