China factory riot leaves Apple millions of iPhones short

Foxconn - AFPTV Teams
Foxconn - AFPTV Teams

Riots at a key iPhone factory in China could leave Apple short of up to six million premium handsets in the vital runup to Christmas, according to concerned bosses.

Increasingly violent unrest among workers at Apple supplier Foxconn’s factory in Zhengzhou, eastern China, will slow production of the iPhone 14 Pro, according to internal estimates prepared by managers.

Around one third of production capacity has been lost as angry staff protested against Covid-19 lockdown restrictions at the factory, Reuters reported citing a source with direct knowledge of the estimates.

Staff dissatisfaction with working conditions over the past few weeks has cut production capacity by six million phones, said the source.

Zhengzhou is the only location making the iPhone 14 Pro and experts have warned Apple could see shipments reduce by 10pc ahead of the Christmas holidays. The plant employs around 200,000 workers.

Apple faces tough trading conditions in the pre-Christmas runup thanks to a combination of consumer demand and falling production capacity.

Wedbush analyst Dan Ives said in a note to clients on Monday that Apple could see shipments declining by 10pc compared with the past twelve weeks “depending on the next few weeks in China around Foxconn production and protests”.

Mr Ives said on Friday that Apple's US stores have stock levels “25pc-30pc below normal heading into a typical December, which is not a good sign” and added that pressures from Black Friday and Cyber Monday could deplete stock levels ahead of Christmas.

Figures from market analysis company IDC showed Apple is the only one of the world's top five biggest smartphone brands to increase the number of phones it sold over the past three months as cash-strapped consumers rein in spending amid double-digit inflation rates.

Apple controls just under a fifth of the world's smartphone markets according to Canalys, sitting behind Samsung and ahead of China's Xiaomi.

Apple is already struggling with falling demand for its budget iPhone 14 models, with the company considering cutting orders for cheaper handsets by up to six million, as The Telegraph reported in September.

Riots at the Zhengzhou plant boiled over into violence last week, with police firing tear gas at protesters. A video from the site showed hazmat suit-clad riot police kicking a protester after they had fallen to the ground.

Protesters fear that China’s draconian zero Covid laws risk spreading the virus thanks to containment measures taken at key industrial sites. Factory workers are kept in “closed loops”, housed in dormitories on site and not allowed to mingle with the outside world.

Some staff fear that they are being forced to share living accommodation with those suffering from Covid as a result.

Aiden Chau of China Labour Bulletin, a Hong Kong-based advocacy group, said: “It's now evident that closed-loop production in Foxconn only helps in preventing Covid from spreading to the city, but does nothing for the workers in the factory.”

Hundreds are thought to have fled Zhengzhou over the past few weeks, with Foxconn being forced to offer cash bonuses to tempt staff back to work.

Apple did not immediately respond to a request for comment.