Apple Reveals Drop in Shares Due to Foxconn Chinese Factory Incident

Andi C., Tech Times 29 November 2022, 10:11 am

Apple's shares have reportedly dropped after its iPhone factory in China saw delays in production from a COVID outbreak.

Emerging COVID-19 cases were first discovered at Foxconn's Shenzhen, China, facility in March, which led to a brief suspension in the production of Apple products.

In response to a COVID-19 outbreak in October, management began enforcing strict safety measures, which lowered work productivity as many factory employees started escaping the facility and protesting against management. The strict zero-COVID policy in China has made it extremely difficult to run Foxconn's Zhengzhou iPhone factory, which employs more than 200,000 workers in the suburbs of the capital.

Apple reports indicate that shares have started to suffer following the issues the China factory has been dealing with.

Apple Reveals Drop in Shares Due to Foxconn Incident

According to Economic Times, Apple's shares dropped 2.6% to $144.22 in New York on Monday, which marks the biggest one-day drop in more than two weeks. Overall, Apple has declined a total of 19% this year. The drop in shares is due to the fact that a majority of Apple's latest series this year are made at the Zhengzhou Foxconn facility.

Apple reported a drop in sales after the September introduction of the newest iPhone 14 and Pro Max, potentially jeopardizing the the company's holiday season sales. Apple reduced its entire manufacturing target from an earlier prediction of 90 million devices to approximately 87 million units.

Additionally, Blomberg predicts that Apple may also see a manufacturing shortage of over 6 million iPhone Pro units due to the low production rate at the Foxconn factory in China. However, Apple and Foxconn anticipate being able to make up the difference in 2023.

Foxconn Zhengzhou Factory Incident Delays iPhone Production

Recently, the Foxconn employee protests triggered a violent altercation with the Chinese police. Initially, the protests started after management denied their workers the bonuses that were promised.

According to CNBC, counterpoint Research stated that the supply timeframes for Apple's iPhone 14 Pro and Pro Max had been pushed back. Customers who ordered the phones recently may anticipate a 37-day wait, which marks the longest delivery time since the models' debut. As of writing, the iPhone 14 is still in stock.

Notably, the shortage prediction comes as one of the few negative analyst predictions, representing a sizable gap for a business producing millions of iPhones every year before the busy holiday season. Wedbush analyst Dan Ives cautions about major iPhone 14 shortages due to China's zero-Covid policy.

"We estimate that Apple now has significant iPhone shortages that could take off roughly at least 5% of units in the quarter and potentially up to 10% depending on the next few weeks in China around Foxconn production and protests," Wedbush analyst Ives warned investors.

Written by Tech Times writer Andi C.