China floods: Foxconn under pressure to meet iPhone targets as it extends workers’ leave into third day

Record amounts of rainfall have forced Foxconn to put workers on leave at some of its factories
Foxconn’s biggest plant in the city, located near the airport, remains unaffected

Foxconn

Josh Yein Hong KongandCoco Fengin Beijing

Published: 8:03pm, 23 Jul, 2021

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Central China’s worst flood in recent memory could put Apple’s primary supplier Foxconn under increasing pressure to meet production targets as the company extends workers’ leave into the third day.

Record rainfall in Henan, which lead to the deaths of at least 33 people and displaced more than 3 million, has forced Foxconn to put workers on leave at one of its factories in Zhengzhou, the capital of the province, according to employees at the plant.

Analysts said disruptions could increase pressure on Foxconn to meet Apple’s ambitious iPhone targets.

“The floods will have an impact on Foxconn’s production, but it might be limited if the situation in Zhengzhou gets better,” said Ethan Qi, senior analyst at Counterpoint Research

Before the floods, the Taipei-based company was expected to start mass production of the next generation iPhone later this month to meet Apple’s target of 90 million units available at launch, 15 million more than for models in previous years.

In addition to Foxconn, Apple has other suppliers with assembly plants in China including Luxshare Precision Industry and Pegatron.

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Charles Shum, an analyst at Bloomberg Intelligence, said if the flooding continues, production at Foxconn’s facilities will be affected.

“The damage the floods have brought to the roads could also be a disruption. Logistics to the airport could be a problem,” Shum added.

He also said that Apple has placed higher orders than usual over concerns of component supplies, especially with the ongoing global chip shortage.

In a statement on Wednesday, Foxconn said it was “closely monitoring the situation” and that its largest facility had seen “no direct impact”.

In a later and separate statement to Chinese media, Foxconn said “personnel within the campus in Zhengzhou remain safe from the flood and the company will make adjustments depending on circumstances surrounding the flood”.

People ride a front loader as they make their way through a flooded road following heavy rainfall in Zhengzhou, Henan province, China, on July 22, 2021. Photo: Reuters

Foxconn did not immediately reply to a request for comment on the latest situation.

On Friday, Foxconn’s plant in one of the hardest-hit areas was still immersed in floodwaters, with workers off for the third day in a row, an employee told the South China Morning Post.

A machine operator told Chinese media Jiemian on Friday that much of the equipment in the plant was still underwater.

On Wednesday, the Post reported that footage from Chinese social media showed water spilling down the stairs of the plant, in Zhongmu county, from at least the third floor.

In the video, workers were seen wading knee-deep through the water while departing the plant.

Foxconn’s biggest plant in the city, located near the city’s airport, remains unaffected. Foxconn has over 250,000 workers spread through its three Zhengzhou facilities. During peak season, that number can exceed 300,000.

03:08

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Foxconn also has plants in other Chinese cities, including Shenzhen, which have not been impacted by the flood.

Still, Foxconn will have an enormous need for manpower in the following weeks.

“The number of orders for Foxconn in the airport zone has multiplied this year,” said a recruitment agency in a job advert posted on Friday. “ Because factories in India were affected by the pandemic, Apple’s orders have come to Foxconn. There will be a lot of overtime work.”

“Foxconn will be operating at its peak after the flood, and the wages will also reach their peak during this period. Don’t hesitate to join us,” the agency said.

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