Covid Outbreak at China iPhone Plant Pushes Workers to the Edge

Bloomberg News
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(Bloomberg) -- Discontent rippled through Apple Inc.’s biggest iPhone plant in China this week, after hastily enacted measures aimed at quelling a Covid outbreak plunged many of its 200,000 workers into isolation -- some without proper meals.

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The emergence of cases at Foxconn Technology Group’s main factory in the central city of Zhengzhou saw it go into a closed loop system, where employees aren’t allowed to leave the manufacturing campus and are tested regularly, people familiar with the matter told Bloomberg News.

Food has become a source of unrest after Foxconn, the Taiwanese company that makes most iPhones sold around the world, shut cafeterias at the manufacturing site known as “iPhone City.” Only workers on the production lines were given meal boxes, with those infected or afraid to leave their company-provided dormitories given more basic fare like bread and instant noodles, some of the people said, asking not to identified for fear of retribution. Scuffles among employees over food have broken out, the people added.

It’s unclear how widely Covid has spread in the closed-off compound, where up to a dozen workers often share cramped living quarters. It’s also unclear whether isolated workers were still deprived of proper meals as of Friday, amid conflicting accounts from employees of the situation across a sprawling campus. An Apple representative referred inquiries to Foxconn. Calls to the Covid taskforce for Zhengzhou city and the Airport Economy Zone, where Foxconn’s plant is located, weren’t answered. And Foxconn representatives declined to comment beyond their earlier statements.

Covid Zero

The tensions at Foxconn’s Zhengzhou plant underscore the economic and social costs of Xi Jinping’s Covid Zero policy. While Foxconn says production hasn’t been impacted by what it described as a “small” outbreak Wednesday, it also shows the potential risk to global supply chains and products from China’s approach, which demands lockdowns, business restrictions and mass testing drives when even one Covid case emerges.

China’s zero-tolerance approach to the pandemic has idled factories and up-ended supply chains. Closed loops enable companies to stay operational during lockdowns but take a toll on workers, whose movements are severely limited, with some even required to sleep on factory floors. Tesla Inc. used a closed loop to resume output during Shanghai’s restive lockdown earlier this year.

In May, hundreds of workers clashed with security personnel at Quanta Computer Inc.’s factory in Shanghai after they were barred for months from contact with the outside world.

Read more: Apple Supplier Faces Worker Revolt in Locked Down China Factory

Now, the fallout is being felt by the nation’s single biggest private sector employer, one often hailed as an example of China’s manufacturing prowess.

The discontent comes at a crucial time for Apple, which launched the iPhone 14 during an unprecedented slump in global electronics demand. While faring better than other smartphone makers, it’s backed off plans to increase production of its new iPhones this year after an anticipated surge in demand failed to materialize, Bloomberg has reported. Apple reported better-than-expected results Thursday but warned of a holiday slowdown.

Any disruption at Zhengzhou threatens to snarl Apple’s finely orchestrated supply chain. Thousands of components from Europe to Asia are shipped into Zhengzhou, assembled manually into devices, then shuttled off to the rest of the world.

Over the past few days, photos and video clips flooded social media sites such as Douyin and Weibo, purportedly taken by Foxconn workers dissatisfied with conditions in the plant. One widely shared clip zeroed in on trash piled up outside dorm rooms, while another showed people jostling for food in an apartment complex, where workers were alleged to have been sent for quarantine. Others posted pleas for help. Messages sent to users sharing these videos on Douyin went unanswered, and Bloomberg hasn’t been able to verify the authenticity of these particular clips.

Foxconn said Wednesday it was assisting a “small number of employees affected by Covid” in its Zhengzhou facility. The firm, known also as Hon Hai Precision Industry Co., is providing the workers with necessities and counseling and called employees its top priority.

Lockdown Disruption

The situation in Foxconn’s plant mirror a widening lockdown of Zhengzhou itself, one of China’s largest cities with 13 million people.

The capital of Henan province locked down one of its most populated districts, Zhongyuan, from Oct. 16, and the city shut non-essential businesses and schools the next day. Other districts also issued stay-at-home orders, meaning most of the city is now in effect locked down -- all for an outbreak that currently numbers about 25 daily cases, according to government statistics. In many cases, officials didn’t officially announce restrictions, spurring confusion among residents, according to social media posts.

China is showing few signs it’s ready to follow countries like Singapore and Australia in moving away from Covid Zero, a strategy that proved effective in the first year of the pandemic but is being challenged by more contagious virus variants and the fact the rest of the world is now living with the pathogen.

Read more: This Is How Long Experts See China Clinging on to Covid Zero

While unhappiness with the restrictions and constant testing is growing in China, President Xi reinforced the policy at the Communist Party congress earlier this month, disappointing investors who hoped he would signal a shift toward easing. Xi has consistently cast Covid Zero as China’s way, saying lives are being saved by avoiding the “herd immunity” approach of other countries. Yet the disruption has chilled the world’s second-largest economy and is dragging on global growth.

Read more: Apple Supplier Grapples with Covid Flare-Up in IPhone City

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