Apple Shares Dip In Premarket Amid Covid Protest At China’s Biggest iPhone Factory

Topline

Violent clashes broke out between security personnel and workers at China’s largest iPhone factory protesting delayed bonus payments and poor living conditions caused by stringent pandemic rules on Wednesday, marking growing discontent within China over the continued use of harsh lockdowns as part of the country’s zero-Covid policy.

Key Facts

Hundreds of workers at Foxconn’s Zhengzhou plant—the world’s biggest iPhone factory—exited their dorm rooms and clashed with security personnel clad in white hazmat suits, Bloomberg reported citing videos recorded by witnesses at the scene.

The clashes left several people injured as local authorities sent anti-riot police to the scene to stop the protests, the report added.

Due to China’s rigid zero-Covid policy and recent outbreaks in Zhengzhou, workers at the Foxconn iPhone factory have been forced to live on-site in a closed bubble and isolated in dorm rooms while dealing with food shortages, lack of access to medicines and other issues.

According to Reuters, Wednesday’s protests were triggered by a purported plan by Foxconn to delay bonus payouts to workers—one of the key incentives the company offered to get workers to return after many fled the plant last month over Covid concerns and poor living conditions.

Apple’s stock was down 0.26% in pre-market trading but continued disruptions at the factory could cause serious repercussions for the tech giant as the plant reportedly manufactures 80% of the latest generation of iPhone.

Surprising Fact

The Foxconn Zhengzhou plant has been referred to as “iPhone City” as it houses more than 200,000 workers—and previously, as much as 350,000 workers, according to the New York Times.

News Peg

In a statement earlier this month, Apple warned about a delay in shipments of its flagship iPhone 14 Pro and iPhone 14 Pro Max phones due to “Covid-19 restrictions” impacting production at the Zhengzhou plant. The company noted the disruption would lead to longer wait times for customers who are trying to purchase either of the two flagship models. “As we have done throughout the COVID-19 pandemic, we are prioritizing the health and safety of the workers in our supply chain,” the statement added. On Apple’s website, the estimated delivery date for an iPhone 14 Pro or Pro Max ordered on Wednesday currently shows up as January 3—six weeks wait time.

Key Background

Wednesday’s clashes will raise further questions about the viability of China’s rigid zero-Covid policy which still relies on restrictive lockdowns and mass testing to stomp out any emerging outbreaks. The city of Zhengzhou, an industrial hub home to 12 million residents, was put under lockdown by authorities after the emergence of an outbreak. Like with other lockdowns across China this year, many of the city’s residents took to social media to complain about several issues including food shortages and limited access to non-Covid medical care. Earlier this month, authorities announced an easing of the lockdown but restrictions continued to remain in place at the so-called iPhone city as the area was still deemed to be “high risk,” as the site had reported infections among a “small number of employees” in late October. The reports of these cases and fear of harsher restrictions prompted many workers to flee the Foxconn complex by jumping across fences.

Big Number

29,157. That is the total number of Covid-19 cases—both symptomatic and asymptomatic—that China reported on Wednesday, close to the previous peak number the country reported in April. The high prevalence of the infections despite stringent lockdown measures is likely to raise further questions about the effectiveness of the zero-Covid approach.

Further Reading

Violent Protests Erupt at Apple’s Main iPhone Plant in China (Bloomberg)

Huge Foxconn iPhone plant in China rocked by fresh worker unrest (Reuters)

New China Covid-19 Lockdowns Would Threaten U.S. Economic Recovery (Just Ask Tesla) (Forbes)