Foxconn’s latest disruptions in Zhengzhou highlight supply chain risks in China, prompting more production in Vietnam and India

Apple supplier Foxconn Technology Group’s latest Covid-19-related disruptions at its compound in the central city of Zhengzhou, where the world’s largest iPhone factory is located, signals the increased demand for major manufacturers to diversify their supply chain outside China, according to analysts.

The recent exodus of thousands of workers from Foxconn’s Covid-19-hit Zhengzhou compound marks the latest disruption in Apple’s contract manufacturing network on the mainland, following extended community lockdowns in the first half of this year and the threat of power restrictions across the country last year.

Apple, however, is not expected to let the production schedule for its products – including the iPhone, iPad, MacBook, iMac and AirPods – slip during the all-important Christmas shopping season across its large markets in North America, Europe and the Asia-Pacific, according to Faisal Kawoosa, founder and chief analyst at consultancy Techarc.

Apple’s iPhone exports from India, for example, are already expected to reach US$2.5 billion in the 12 months through March 2023, according to a Bloomberg report in October that cited people familiar with the matter. This would show that the South Asian nation is advancing to become a major location for electronics manufacturing.

Foxconn, formally known as Hon Hai Precision Industry, had earlier added extra iPhone production capacity to an existing factory in India as part of its push to diversify its supply chain beyond China, according to a report in August by Indian daily newspaper The Economic Times, which cited unnamed sources.