iPhone factory protest in China reveals zero-COVID policy hurting global technology firms

The world's largest iPhone manufacturing plant in central China which witnessed a violent workers' protest last week, significantly disrupted Apple's already constrained supplies, revealing how the nation's strict zero-COVID policy is harming international technology companies. This all started when workers fled the manufacturing complex in Zhengzhou, the capital of the central province of Henan, last month over concerns amid COVID-19 spike. Following the staff shortage, incentives were provided to the employees. 

However, as per a CNN report, this week there were demonstrations because the freshly hired personnel felt the management had broken their promises. The employees, who clashed with security staff wearing hazmat suits, were ultimately given money to quit and leave.   

According to analysts, the difficulties faced by Foxconn, a major Apple supplier and the owner of the factory, will accelerate the process of diversification away from China.

iPhone 14 production has been slowed in China

The continuous production slowdown at Foxconn's huge facility in the central Chinese city of Zhengzhou, according to Daniel Ives, managing director of equity research at Wedbush Securities, is an "albatross" for Apple. Ives noted, “Every week of this shutdown and unrest we estimate is costing Apple roughly $1 billion a week in lost iPhone sales. Now roughly 5% of iPhone 14 sales are likely off the table due to these brutal shutdowns in China,” CNN reported.  

Ives indicated that the Black Friday holiday weekend saw much higher demand for iPhone 14 units than they were available, which could result in significant shortages leading up to Christmas. He also noted that the Foxconn production problems, which began in October, have dealt a significant "gut punch" to Apple this quarter. 

Apart from Daniel Ives, Ming-Chi Kuo, an analyst at TF International Securities, highlighted that the scenario at the Zhengzhou campus has a negative impact on more than 10% of the world's ability to produce iPhones. 

In the meantime, according to workers and videos shared on social media on Wednesday, November 23, protests over contract disagreements among anti-virus controls at the largest Apple iPhone production in the world resulted in beatings and detentions of workers. 

As per the Associated Press reports, thousands of protesters in masks were seen to be confronting rows of police in white hazmat gear and plastic riot shields in videos posted to Chinese social media that claimed to have been shot inside the plant in Zhengzhou. A club was even used to strike one individual in the head, while another was carried away while having his arms held behind his back. 

 In other footage, demonstrators could be seen shooting fire extinguishers at police. Social media posts stated that they were protesting an unidentified contract infringement. Notably, in China, poor working conditions are very common. On November 21, a factory fire in the Henan region of China claimed the lives of 38 employees. 

(Image: AP/ Unsplash)