Apple plans to move iPhone production out of China amid protests

According to a report by The Wall Street Journal, Apple has plans to move part of its production out of China, home to the world's largest iPhone factory.

Taiwan The Journal reported that the world s most valuable company is telling suppliers to plan more actively for assembling Apple's ticker: AAPL products elsewhere in Asia, especially India and Vietnam, in an effort to reduce its dependence on Taiwanese assemblers led by Foxconn 2354. Foxconn is one of the world's largest electronics contractors and produces 70% of global iPhone shipments. Apple didn't reply to Barron's requests for comment.

In recent weeks, Foxconn's site in the city of Zhengzhou, China, has been roiled by workers protesting overdue pay and tough Covid 19 restrictions, forcing the company to apologize on November 24. In November of last year, Foxconn, also known as Hon Hai Precision Industry Co., announced that it is now offering bonuses of as much as $1,800 to workers at its Zhengzhou facility. In December and January, Foxconn will increase wages by as much as 13,000 yuan for full-time workers who joined at the beginning of November or earlier, the company said.

On Wednesday, Zhengzhou lifted the five day period of Covid lockdown restrictions. The damage to the iPhone production may have already been done, ahead of the key holiday period. The protests at the Foxconn plant, along with Covid 19 measures, caused analysts to predict severe shortages of iPhone 14 Pro models. Apple introduced the iPhone 14 Pro and Pro Max models in September, and they are now the hottest sellers in its new range.

Wedbush analysts think that shipments will be about 20% - or 15 million to 20 million units - less than expected, while TFI Asset Management s Ming-Chi Kuo thinks shipments will be about 20%.

They differ on the extent of the impact for Apple. Wedbush analysts think about 10 million to 15 million iPhone shipments will be pushed out in March, as supply starts to ramp back up. That assumes no more protests or shutdowns. He said that Apple stores, retailers and online channels are looking empty handed for most Pro models until early January, despite a demand to supply ratio of 3: 1. Kuo, pointing to a recession, doesn't think that demand will be deferred.

The company could see a shortfall of more than six million iPhone Pro models due to the unrest, according to the shares of Apple, falling 2.6% on Monday. The company's shares have been under pressure recently due to problems at its factories in China, less demand for its new iPhone 14 and investors distaste for Big Tech. Apple's shares are down 17% this year.