Foxconn's Henan plant has entered the battle against the epidemic Will Apple's world's largest production line be affected?

As Apple's largest production base in the world, the impact of the Henan epidemic on supply chains such as Foxconn has also affected the sales trend of Apple's mobile phones.

On January 10, CBN learned from the official platform of Foxconn Zhengzhou Science and Technology Park that Zhengzhou has opened the third round of nucleic acid testing for all employees, and the testing points cover ten areas of Foxconn Zhengzhou Park. The reporter noted that 24 nucleic acid testing points have been set up in Zhengzhou Comprehensive Insurance District.

At present, it is the peak season of apple sales, and for the operation of Foxconn's production line, the company's spokesperson told reporters that the production and operation of the park are normal.

However, from the latest situation of the epidemic released by Henan, the local epidemic situation has successively appeared in Zhengzhou, Luoyang, Anyang, Xuchang, Shangqiu, Xinyang, Zhoukou and other places, and at 0-24 o'clock on January 9, there were 60 new local confirmed cases in Henan Province, including 24 cases in Zhengzhou City, 15 cases in Anyang City, and 21 cases in Xuchang City. In the prevention and control of the new crown epidemic, Henan must not only face the Delta virus in Zhengzhou, Xuchang Yuzhou and other places, but also face the Aumetic Kerong virus in Anyang.

Cases of Aomi Kerong and Delta were found in Henan

Following Tianjin, Anyang, Henan Province, also found a local confirmed case of Aomi Kerong.

On January 8, Anyang City found two cases of positive nucleic acid of the new coronavirus in the active testing population. On January 9, the whole genome of the virus was sequenced by the laboratory of the Henan Provincial Center for Disease Control and Prevention, showing that the two local cases infected with the virus were all BA.1 branches of the Aomi Kerong variant, and after analysis and comparison, they belonged to the same transmission chain as the existing local epidemic situation in Jinnan District, Tianjin.

Combined with the results of epidemiological investigation and gene sequencing, the source of infection of this epidemic in Anyang City was basically identified as a college student who returned to Tangyin County of Anyang City from Jinnan District of Tianjin City on December 28, 2021.

Previously, after genetic sequencing analysis and comparison, the epidemic situation in Xuchang Yuzhou City was homologous to the epidemic situation in Zhengzhou City, and the virus gene was sequenced as a Delta strain. On January 10, the Henan Provincial Health Commission released the news that from December 31, 2021 to 12:00 on January 9, 2022, the province reported a total of 258 locally confirmed cases.

At present, many places in Henan have completed three to four rounds of nucleic acid testing for all employees, including foxconn and other mobile phone manufacturing bases.

A video released on the official platform of Foxconn Zhengzhou Science and Technology Park can be seen that a large number of Foxconn employees are conducting nucleic acid testing at the nucleic acid testing point of Fuxin Apartment, which also covers Foxconn MountainTop, Yukang, Huahong Apartment, etc. In addition, a number of plants have completed the third round of nucleic acid testing on the 8th.

A Foxconn spokesperson told reporters that the current (epidemic) has not affected production capacity.

Since Foxconn's Apple mobile phone project entered Henan in the second half of 2011, Foxconn's proportion of Henan's foreign trade imports and exports has climbed from 28.7% in 2011 to a peak of 67.5% in 2015. Driven by Foxconn, many smartphone brands have gathered in Zhengzhou Aviation District, which has promoted the early use of Zhengzhou Airport Smartphone Industrial Park in January 2014. By 2015, the production of smartphones in Zhengzhou Airport District exceeded 200 million, accounting for one-seventh of the world's smartphone supply.

From the perspective of production capacity layout, Zhengzhou Foxconn has three factories in the local area, namely Zhengzhou Airport Factory, Jingkai District Factory and Zhongmu County Factory. The Zhengzhou plant is also Foxconn's main manufacturing base for Apple's iPhone production, with more than 90 production lines and about 350,000 workers. IDC data shows that in 2019, China's smartphone exports accounted for 27% of global smartphone sales, of which 1/4 of the exports came from Henan Province, and Foxconn's Zhengzhou factory accounted for more than 60% of Henan Province's total trade.

Will Apple production be affected?

It is currently the peak production season for Apple's iPhone flagship new product.

On December 27, 2021, the monthly domestic mobile phone sales monitoring data released by the market agency CINNO Research showed that Apple's sales of the new iPhone 13 series in 2021 are still at a high level, of which the iPhone 13 ranks first in the domestic market for two consecutive months with sales of about 2.72 million units.

Downstream sales are also driving Foxconn's overall operating performance. On December 16 last year, Hon Hai Precision announced its November results, and the company's revenue for that month was NT$621.713 billion, an increase of 12.86% month-on-month but a decrease of 8.76% year-on-year. However, thanks to strong demand for the iPhone 13 series, Hon Hai Precision's net profit in the third quarter was NT$37 billion (about US$1.3 billion), higher than the average analyst estimate of NT$32.4 billion, and sales of NT$1.4 trillion, a record high.

It is reported that in order to meet the production needs of the iPhone 13 Pro, Foxconn's Henan Zhengzhou factory recently recruited urgent workers and set up a "rebate bonus" as an additional reward.

In the recruitment software, Zhengzhou Port District Foxconn workers set up a total of three recruitment policies, in addition to the hourly work policy of 27 yuan / hour and the temporary work policy of 26 yuan / hour ago, there is also a return to work policy, employees monthly salary of 4000-5500 yuan, attendance of 55 days, while working enough for 90 days can also get 10,000 yuan of rebates. In this way, the monthly salary of hourly workers and temporary workers entering the factory is 7,000-9,000 yuan, while entering the factory with rework workers has at least 22,000 yuan in three months.

Foxconn did not confirm the above recruitment information. However, the reporter from Foxconn's multiple recruitment software release information, is still increasing efforts to recruit.

It is worth noting that in the Apple 2020 supplier list released in the middle of last year, there are as many as 98 Chinese companies, and the normal operation of the Chinese supply chain will have a direct impact on Apple's sales.

Industry insiders believe that Apple has nearly 10,000 direct employees in China and millions of workers in its supply chain. Due to the impact of the new coronavirus epidemic, the vast majority of assembly line workers have been restricted from traveling, and if the epidemic is not controlled in time, the supply chain disruption dilemma will occur. "Mobile phone factories will reserve 2 to 8 weeks of spare parts and other equipment inventory, enough to assume a buffer role in the short term of the outbreak." But it is inevitable that if the epidemic continues to run rampant in this era of light inventory, the impact of supply chain disruptions will surely come quickly. ”