iPhone production will see major impact if China factory halt continues

Posted:
in iPhone edited February 2020
Production of the iPhone could be disrupted by the coronavirus outbreak if things get much worse, with Apple assembly partner Foxconn reportedly halting the majority of its production in China until February 10.




One week ago, Foxconn claimed its facilities were prepared to fulfill all global orders for product assembly, which would include Apple product lines like the iPhone, iPad, and Mac, despite the spread of the virus. In a new report, Foxconn's production has seemingly taken a hit, due to having many facilities based in China.

A source of Reuters claims Foxconn has halted "almost all" of its China-based production, after companies in the area were told to shut down until at least February 10. The shutdown time may be extended depending on the spread and strength of the virus, which could potentially cause further delays.

Companies operating in the Chinese major manufacturing hub Suzhou were informed to stay closed until February 8, while factories in Shanghai were to do so until February 9. The Dongguan manufacturing hub has been instructed to close until February 10.

Foxconn has so far seen a "fairly small impact" from the outbreak, the source insisted, due to shifting production in other territories to fill the gap, including in India, Mexico, and Vietnam. However, the source believes Foxconn can make up for the imposed delays by making the factories work in overtime.

A continued shutdown beyond February 10 could affect Foxconn's shipments, with the source pointing out there are concerns with the Guangdong province and Zhengzhou in Henan province, areas where a number of key iPhone facilities operate.

"What we are worried about is delays for another week or even a month," the source told the report, adding "It definitely will have an impact on the Apple production line. The tricky question is whether we will be able to resume production. It's up to the instructions given by central and provincial governments."

Foxconn employees and clients have been told to not head to the factories, with the usual rates of pay provided for those who followed the rules, a memo seen by the report adds. Employees are also offered a bounty for reporting others who break the rules, with a dedicated hotline also open for tips.

Employees returning to factories ahead of time will apparently be "severely" punished.

Major Outbreak

The coronavirus -- officially titled 2019-nCoV -- is believed to impact Apple's sales in a number of ways. Chiefly this is going to impact Apple's manufacturing lines via Foxconn and other suppliers.

Analyst Ming-Chi Kuo estimates the iPhone shipments alone could be severely disrupted, possibly reducing overall shipments in the quarter by as much as 10%.

The virus has also led to Apple closing all of its 42 stores in China, as well as an unspecified number of local Apple offices, in what it referred to as "an abundance of caution" at the start of February. While the stores will have an immediate effect on revenue from the region, it will also impact revenue for a period after, with potential customers opting to stay home instead of risking infection.

The closures are a far cry from one week ago when Apple CEO Tim Cook discussed the possible impact of the virus outbreak, a time when Apple had only encountered one store closure and enforced a limitation on employee travel. "We have alternate sourcing and contingency plans," Cook explained during an investor call, while admitting it was factoring in factory re-opening delays into its guidance.
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Comments

  • Reply 1 of 31
    blastdoorblastdoor Posts: 3,209member
    There seems to be a big disconnect between descriptions of what this virus does and the reaction to it. 

    It sounds like it's more or less equivalent (in terms of health effects) to the flu in the absence of a flu vaccine -- that is, hardly cataclysmic. 

    Rather than the virus causing economic hardship, it seems like it's the reaction to the virus that may cause hardship. 
    cy_starkmanwatto_cobra
  • Reply 2 of 31
    lkrupplkrupp Posts: 10,557member
    Question? Is the Coronavirus killing young and old or is it like the typical flu that mostly kills the elderly and those with compromised immune systems? The Coronavirus is not new and is among a common family of Coronaviruses. What makes this one different? The news media have hyped this up to apocalyptic proportions.
    mwhitemuthuk_vanalingamwatto_cobra
  • Reply 3 of 31
    tmaytmay Posts: 6,238member
    blastdoor said:
    There seems to be a big disconnect between descriptions of what this virus does and the reaction to it. 

    It sounds like it's more or less equivalent (in terms of health effects) to the flu in the absence of a flu vaccine -- that is, hardly cataclysmic. 

    Rather than the virus causing economic hardship, it seems like it's the reaction to the virus that may cause hardship. 
    It meets the standard for an epidemic, and if it continues to spread outside of China, a pandemic. 

    Cataclysmic in terms of an economy if you have to isolate and quarantine your population for any length of time.
    watto_cobra
  • Reply 4 of 31
    Mike WuertheleMike Wuerthele Posts: 6,813administrator
    lkrupp said:
    Question? Is the Coronavirus killing young and old or is it like the typical flu that mostly kills the elderly and those with compromised immune systems? The Coronavirus is not new and is among a common family of Coronaviruses. What makes this one different? The news media have hyped this up to apocalyptic proportions.
    A "Coronavirus" isn't new, SARS and MERS were ones, but this is a new strain. The biggest problem right now with this particular coronavirus is it is on top of an already pretty heavy flu season. So, an overburdened system is further being burdened by a second contagion.

    As far as who it's killing, I don't think the data is set on that. And, we're still in the vertical stage of contagion, with no plateau in sight yet.
    edited February 2020 spice-boyravnorodomwatto_cobra
  • Reply 5 of 31
    Does seem like a over reaction to this virus, so far in the US alone the standard flu has killed 10 thousand people but no one here is freaking out about that huge number.
    mwhitemuthuk_vanalingamwatto_cobra
  • Reply 6 of 31
    The fallacy of the West to place all their production eggs in the China basket is just staggering. 
  • Reply 7 of 31
    sirozhasirozha Posts: 801member
    blastdoor said:
    There seems to be a big disconnect between descriptions of what this virus does and the reaction to it. 

    It sounds like it's more or less equivalent (in terms of health effects) to the flu in the absence of a flu vaccine -- that is, hardly cataclysmic. 

    Rather than the virus causing economic hardship, it seems like it's the reaction to the virus that may cause hardship. 
    The flu doesn’t have a 3% mortality rate. Additionally, those who survive may have severe complications, such as failing kidneys, heart, liver, lung damage, encephalitis, etc. The consequences of  this illness could be life changing for a much higher percentage of people. The rate of infections is also much higher than the flu. The number of new infections per day quadruples every week. 

    edited February 2020 seanismorrisavon b7ElCapitan
  • Reply 8 of 31
    jmey267 said:
    Does seem like a over reaction to this virus, so far in the US alone the standard flu has killed 10 thousand people but no one here is freaking out about that huge number.
    If you read a lot... this is how many apocalyptic stories start.

    New virus strain -> infects a significant number of people -> provides a breeding ground -> virus mutates to becomes significantly more infectious with high mortality rate -> civilization ends

    These things aren’t likely, but high population + global travel (lack of population isolation) + drug therapy’s (that may increase mutations) etc. increases the chance that one of these new strains will be devastating. 

    It’s kind of like the superbug fear, where bacteria become resistant to common antibiotics... and we end up responsible for our own doom.

    BOOM Zombies!

    I always liked the stories where: new dangerous virus appears, we create a vaccine but it’s rushed with minimal studies, mistakes are made and the live vaccine is released.

    BOOM Zombies!
    edited February 2020
  • Reply 9 of 31
    GG1GG1 Posts: 483member
    sirozha said:
    blastdoor said:
    There seems to be a big disconnect between descriptions of what this virus does and the reaction to it. 

    It sounds like it's more or less equivalent (in terms of health effects) to the flu in the absence of a flu vaccine -- that is, hardly cataclysmic. 

    Rather than the virus causing economic hardship, it seems like it's the reaction to the virus that may cause hardship. 
    The flu doesn’t have a 3% mortality rate. Additionally, those who survive may have severe complications, such as failing kidneys, heart, liver, lung damage, encephalitis, etc. The consequences of  this illness could be life changing for a much higher percentage of people. The rate of infections is also much higher than the flu. The number of new infections per day quadruples every week. 


    A colleague in Taiwan says the actual afflicted in Wuhan is 30x to 100x higher than what China is reporting.
  • Reply 10 of 31
    Time for Foxconn (or whoever it is)/Apple to ramp up iPhone production in India then?
    That will please the Indian Government and possibly deflect those who will inevitable APPL shorters.
    Anilu_777
  • Reply 11 of 31
    spice-boyspice-boy Posts: 1,450member
    I'm glad to read different governments appear to be working together to stop the potential worldwide spread of this dangerous virus. If they do their work well or course we will have to hear about how "exaggerated"  the fear was from those who thought they were somehow immune. 
  • Reply 12 of 31
    hentaiboyhentaiboy Posts: 1,252member
    "Employees are also offered a bounty for reporting others who break the rules, with a dedicated hotline also open for tips. 

    Employees returning to factories ahead of time will apparently be "severely" punished".

    Sounds like fun working for Foxconn.
  • Reply 13 of 31
    Try building a factory in the United States!

    Duhhhh..,
  • Reply 14 of 31
    M68000M68000 Posts: 702member
    The fact that major cities are under lockdown shows that this is most likely something much more than “flu”...  so whoever is comparing it to flu should think about that.  In addition,  governments across the globe are screening and putting people in quarantine for weeks - do you still think this is just the “flu” ??  It’s like there is more to the story here
  • Reply 15 of 31
    M68000 said:
    The fact that major cities are under lockdown shows that this is most likely something much more than “flu”...  so whoever is comparing it to flu should think about that.  In addition,  governments across the globe are screening and putting people in quarantine for weeks - do you still think this is just the “flu” ??  It’s like there is more to the story here
    true that, but what is the more to it story?
  • Reply 16 of 31
    frayapple said:
    Try building a factory in the United States!

    Duhhhh..,
    micro localised factories in Apple Stores where boxes of parts are assembled as and when purchased.
  • Reply 17 of 31
    kevin keekevin kee Posts: 1,288member
    The effect of media hype has penetrated into normal ordinary daily life of everybody in the world. Just today, I sneeze due to my allergic inside a train, but the reaction is epic in proportion. Needless to say I have my own compartment.
  • Reply 18 of 31
    blastdoorblastdoor Posts: 3,209member
    sirozha said:
    blastdoor said:
    There seems to be a big disconnect between descriptions of what this virus does and the reaction to it. 

    It sounds like it's more or less equivalent (in terms of health effects) to the flu in the absence of a flu vaccine -- that is, hardly cataclysmic. 

    Rather than the virus causing economic hardship, it seems like it's the reaction to the virus that may cause hardship. 
    The flu doesn’t have a 3% mortality rate. Additionally, those who survive may have severe complications, such as failing kidneys, heart, liver, lung damage, encephalitis, etc. The consequences of  this illness could be life changing for a much higher percentage of people. The rate of infections is also much higher than the flu. The number of new infections per day quadruples every week. 

    Since when is the South China Morning Post “the source”? 

    Don’t take that mortality rate as gospel. To calculate that rate, you need to know two things:

    1. Numerator
    2. Denominator

    #1 is relatively easy. You have a dead body, you test it for Coronavirus. 
    #2 is much harder. You don’t go around testing all the live bodies for Coronavirus. If most people who get the virus don’t show noticeable symptoms beyond cold symptoms, then you’ll never know they had it and they’ll be excluded from #2. That results in an exaggerated mortality rate. 

    Edit: 
    another perspective: https://www.psychologytoday.com/us/blog/its-catching/202001/the-chinese-coronavirus-is-not-the-zombie-apocalypse 
    edited February 2020 muthuk_vanalingam
  • Reply 19 of 31
    blastdoor said:
    sirozha said:
    blastdoor said:
    There seems to be a big disconnect between descriptions of what this virus does and the reaction to it. 

    It sounds like it's more or less equivalent (in terms of health effects) to the flu in the absence of a flu vaccine -- that is, hardly cataclysmic. 

    Rather than the virus causing economic hardship, it seems like it's the reaction to the virus that may cause hardship. 
    The flu doesn’t have a 3% mortality rate. Additionally, those who survive may have severe complications, such as failing kidneys, heart, liver, lung damage, encephalitis, etc. The consequences of  this illness could be life changing for a much higher percentage of people. The rate of infections is also much higher than the flu. The number of new infections per day quadruples every week. 

    Since when is the South China Morning Post “the source”? 

    Don’t take that mortality rate as gospel. To calculate that rate, you need to know two things:

    1. Numerator
    2. Denominator

    #1 is relatively easy. You have a dead body, you test it for Coronavirus. 
    #2 is much harder. You don’t go around testing all the live bodies for Coronavirus. If most people who get the virus don’t show noticeable symptoms beyond cold symptoms, then you’ll never know they had it and they’ll be excluded from #2. That results in an exaggerated mortality rate. 

    Edit: 
    another perspective: https://www.psychologytoday.com/us/blog/its-catching/202001/the-chinese-coronavirus-is-not-the-zombie-apocalypse 
    You obviously didn’t read the articles. Doctors quoted in the articles say that the deaths were already occurring in December. 

    You depend on the communist government to be transparent about the rate of deaths? China is also experiencing a flu epidemic. The hospitals turn people away. No one is testing every case. No one know how much of it is flu and how much this new Coronavirus. These stats are extremely unreliable. The quadrupling of the daily infection rate every week is the official stats. The reality is much worse.  Hong Kong medical researchers say that the real number of infected is at least 100,000. No one knows the real number of the dead. 

    The fact that China locked down 100 million people in their cities and ordered all manufacturing facilities throughout China to stay closed at least for another week should tell us much more than the numbers they are releasing. 

    SCMP is a much more authoritative source on the Chinese epidemic than any other source unless you want to believe the official communist propaganda. SCMP is an English-language outlet located in Hong Kong and owned by the founder of Ali Baba. They are still able to be an independent  from the government news outlet. Perhaps not for much longer, but at least for now. 
    edited February 2020
  • Reply 20 of 31
    tmaytmay Posts: 6,238member
    blastdoor said:
    sirozha said:
    blastdoor said:
    There seems to be a big disconnect between descriptions of what this virus does and the reaction to it. 

    It sounds like it's more or less equivalent (in terms of health effects) to the flu in the absence of a flu vaccine -- that is, hardly cataclysmic. 

    Rather than the virus causing economic hardship, it seems like it's the reaction to the virus that may cause hardship. 
    The flu doesn’t have a 3% mortality rate. Additionally, those who survive may have severe complications, such as failing kidneys, heart, liver, lung damage, encephalitis, etc. The consequences of  this illness could be life changing for a much higher percentage of people. The rate of infections is also much higher than the flu. The number of new infections per day quadruples every week. 

    Since when is the South China Morning Post “the source”? 

    Don’t take that mortality rate as gospel. To calculate that rate, you need to know two things:

    1. Numerator
    2. Denominator

    #1 is relatively easy. You have a dead body, you test it for Coronavirus. 
    #2 is much harder. You don’t go around testing all the live bodies for Coronavirus. If most people who get the virus don’t show noticeable symptoms beyond cold symptoms, then you’ll never know they had it and they’ll be excluded from #2. That results in an exaggerated mortality rate. 

    Edit: 
    another perspective: https://www.psychologytoday.com/us/blog/its-catching/202001/the-chinese-coronavirus-is-not-the-zombie-apocalypse 
    Given that your link is 7 days old, I will disregard it for timeliness, though I do agree that the Flu currently is cause for far more deaths.

    https://www.businessinsider.com/wuhan-coronavirus-pandemic-what-that-means-epidemic-difference-2020-2

    • Scientists say the Wuhan coronavirus that has so far killed at least 362 people and infected over 17,000 other people could soon become a pandemic.
    • The World Health Organization defines a pandemic as "the worldwide spread of a new disease."
    • It's also defined by a lack of available treatment, a lack of human immunity, and an ability to spread from person to person.
    • The Wuhan coronavirus is "very, very transmissible, and it almost certainly is going to be a pandemic," Dr. Anthony Fauci, the director of the National Institute of Allergy and Infectious Diseases, told The New York Times on Sunday.
    Even this isn't the Zombie Apocalypse, but it could be broad enough in scope to start a mild world wide recession, which has all kinds of implications politically and economically.


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