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Sales at Foxconn iPhone factory slump by almost a third amid Covid riots

Foxconn - STR/AFP
Foxconn - STR/AFP

Sales at Apple supplier Foxconn have fallen by nearly a third amid a shut down and violent protests at its iPhone plant in China promoted by Beijing’s strict Covid lockdowns.

The Taiwanese technology manufacturer, which assembles 70pc of the world’s iPhones, said sales in November had fallen to around £14.7bn, down 29pc on October and 11pc on the previous year, prompting concerns of a shortfall in Apple's Christmas sales.

The fall comes amid discontent at one of the company’s biggest factories, a facility employing 200,000 people in the Chinese city of Zhengzhou, where staff have protested against harsh coronavirus measures and allegations of docked pay.

Zhengzhou has endured a series of lockdowns and the company’s factory was cut off from the outside world to control a breakout among staff.

But the gruelling conditions prompted hundreds of staff to climb over wire fences and flee the facility in October, and in November protests broke out over pay, leading to clashes with hazmat-clad police officers.

The company said the outbreak at its plant had since been “brought under control” and the Government lockdown in the city ended over the weekend.

Foxconn said: “In addition to re-allocating production capacity to different factories, we have also started to recruit new employees and are gradually moving toward the direction of restoring production capacity to normal.

“We are making every effort to protect the rights and interests of employees, so that current employees and new hires receive the best care to get through this epidemic together.”

The riot at the company’s factory has left Apple short millions of iPhones heading into a crucial period of Christmas sales. Reuters reported that the disruption had left Apple with a shortfall of six million iPhones.

Dan Ives, an analyst at Wedbush Securities, said Apple had begun to look at shifting production out of China in the light of the “black eye” it had received from the chaos at Zhengzhou.

Mr Ives said: “The current Apple China production quagmire which has been an absolute disaster for Cupertino over the past month and is now causing iPhone shortages between 10 million and 15 million units in this all-important holiday season.

“The shift out of China will not be easy and come with clear logistical, engineering, and infrastructure hurdles as the aggressive move to India and Vietnam now begins.”

He estimated half of all iPhone production could come from India and Vietnam in the next three years compared to less than 10pc today.