China’s tumbling smartphone exports, Foxconn disruptions raise supply chain concerns as firms seek to ‘avoid risks’

Coronavirus-induced manufacturing disruptions in China, highlighted by smartphone exports from a major industrial region dropping sharply in October, have increased concerns over supply chain relocation amid an already bleak export outlook.

Henan province, which is home to Foxconn’s mega iPhone factory in its capital city of Zhengzhou, assembled and exported 8.4 million smartphones in October, down by 16.9 per cent from 10.2 million in the previous month, according to Chinese customs data.

This comes despite Apple releasing the new iPhone 14 series in mid-September, while the decline is especially alarming amid an intensifying trend of manufacturers diversifying away from China to the likes of India and Vietnam, analysts said.

“Foxconn epitomises China,” said Zhang Zhiwei, chief economist at Pinpoint Asset Management.

Orders from the United States were the most affected, with the number of shipments from Henan dropping by over 1 million, or nearly a fifth month-on-month, to 4.37 million, which pushed the export value down by more than US$609 million, customs data showed.

In the first 10 months of the year, Henan’s exports totalled US$67.15 billion, half from nearly 60 million assembled smartphones – with more than 50 per cent bound for the US.

The Zhengzhou plant, which is operated by Foxconn Technology Group and can employ up to 350,000 workers at its peak, is a major driver for the local economy and is representative of China’s export-oriented manufacturing industry, analysts said.

01:51

Violence erupts at world’s largest iPhone factory over benefits and Covid-19 controls

Violence erupts at world’s largest iPhone factory over benefits and Covid-19 controls