Apple’s biggest contractor Foxconn pumps new investment into facilities in northern China as ‘iPhone City’ struggles
- Foxconn Technology Group said it has made 1 billion yuan (US$142 million) in new investment towards its facilities in the northern Chinese city of Taiyuan
- The company is scrambling to restore production capacity after an estimated tens of thousands of workers fled its sprawling campus in Zhengzhou
Foxconn Technology Group, Apple’s biggest contractor, has injected 1 billion yuan (US$142 million) in fresh capital into its facilities in northern China, as its iPhone factory in the central Chinese city of Zhengzhou – the largest in the world – struggles to meet production targets amid a severe manpower shortage.
The investment was made towards a Foxconn subsidiary in Taiyuan, capital of Shanxi province, according to a stock exchange filing on Friday. The province is listed by Apple as one of Foxconn’s primary locations for the manufacturing of Apple products in mainland China, along with six other provinces including Henan and Jiangsu.
The Taiyuan plant, established in the early 2000s, mainly produces electronic components, mobile communication systems, smartphones and digital cameras, public information shows.
Foxconn, formally known as Hon Hai Precision Industry, called the latest move a “long-term investment” without further elaborations.
As a result of “the challenges at Zhengzhou” as well as softening consumer demand for entry-level iPhones, investment bank UBS this week slashed its forecast of iPhone 14 production by 16 million to 76 million units for the second half of this year.
In a bid to fill up its numerous vacancies, Foxconn is offering as much as 21,500 yuan of additional incentives over two months from December through January to returning workers who resigned as early as January 2018.
Despite repeated disruptions to its supply chains caused by China’s stringent Covid-19 control measures, Foxconn chairman Liu Young-way said in last month’s earnings call that the company planned to increase capital spending in 2023, with the largest portion going to mainland China.
Still, the company is taking measures to diversify its manufacturing footprint.
On Friday, Foxconn also announced US$58.98 million of investment into a subsidiary in the Czech Republic, where the company currently runs factories that produce screens, smartphones and cloud servers, as well as design, research and development centres, according to Taiwan’s official news agency CNA.
It followed US$300 million of investment in a new Apple plant in Vietnam in August.