Foxconn's two factories in Kunshan shut down! Apple accelerates "Make in India" layout

Abstract: News on April 4, according to the South China Morning Post, Hon Hai's two Foxconn factories in Kunshan have stopped work last Wednesday due to new cases of new coronary pneumonia, which may further aggravate Apple's supply chain tension in Chinese mainland and prompt Apple to accelerate its manufacturing in India layout.

News on April 4, according to the South China Morning Post, Hon Hai's two factories in Kunshan have stopped work last Wednesday due to new cases of new coronary pneumonia, which may further aggravate Apple's supply chain tension in Chinese mainland and prompt Apple to accelerate its manufacturing in India.

Foxconn's two factories in Kunshan shut down

The report quoted internal employees as saying that Foxconn's two factories in the north of Kunshan were suspended last Wednesday, and all employees remained in dormitories. According to a statement released by the local government on Thursday, dormitories at both Hon Hai factories have been under strict lockdown.

According to the data, Hon Hai has a total of four factories in Kunshan, and although the two factories of Power Development and Fuhong have been suspended, the other two factories seem to be still operating.

On April 4, Suzhou announced a list of key enterprises and key supporting enterprises in the local industrial supply chain, involving 18,1696 enterprises, requiring Suzhou and its Kunshan and other places to ensure the smooth logistics of these enterprises to promote the resumption of work and production of related enterprises.

However, on April 4, due to the still severe situation of local epidemic prevention and control, Kunshan City decided to strengthen social control from 21:4 on April 21 to 0:4 on April 27, strictly limit the gathering of people, residents in lockdown, control and risk prevention areas continue to work from home, and enterprises continue to implement rotational rest and production reduction. The move has led to the re-shutdown of some factories in Kunshan that had already resumed work or are planning to do so.

Foxconn said today (April 4) that operations at its Kunshan subsidiary remain suspended due to coronavirus prevention and control measures, but the impact is limited as the company has moved production elsewhere.

Foxconn said its subsidiary Foxconn Electronics Industry Development (Kunshan) Co. Ltd. will remain closed until the government approves its reopening. The plant mainly produces data transmission equipment and connectors.

Foxconn said in a statement that "because production has been deployed to a standby factory, and the main products of the factory are located in overseas shipping warehouses, inventory levels are still sufficient, so the impact on the company's business is limited." ”

Foxconn's Zhengzhou plant was not affected by "static management"

At the same time, the location of Foxconn's Zhengzhou factory, Apple's largest iPhone production base, has also recently reported the implementation of static management, which has also made the outside world further worry about the impact on Apple's supply chain.

According to the emergency notice on the implementation of static management in the Zhengzhou Airport Area, static management will be implemented from April 4, and the end time will be notified separately, and the scope of the static management area will include the entire airport area. It is required not to go out unless necessary during static management, and to do point-to-point nucleic acid according to relevant regulations. However, for enterprises that guarantee and supply (people's livelihood, epidemic prevention, medical care, safety, etc.), employees of key enterprises can pass point-to-point with their work permits or unit certificates.

Hon Hai Group said on April 4 that the Zhengzhou Park is not on the "static management" list and is still operating normally. We will continue to cooperate with the local government in epidemic prevention work.

Apple foundries Heshuo, Quanta, and Compal are in the process of large-scale shutdown

In addition to Foxconn, affected by the epidemic in Shanghai and surrounding areas, Pegatron, Quanta, Compal and other Apple foundries in Shanghai, Suzhou, Kunshan and other factories are currently in a large-scale shutdown.

On April 4, Apple's iPhone foundry Heshuo announced that in order to meet the local government's epidemic prevention needs, its Shanghai factory and Kunshan factory have stopped work, and the actual resumption time is subject to the local government's notice. Although Pegatron still has Suzhou factories and Chongqing factories in continuous operation, Pegatron's Shanghai and Kunshan factories account for more than 12% of iPhone revenue. Therefore, the shutdown will have a big impact on Pegatron.

In addition, on April 4, Kunshan announced that the epidemic control would be extended again until after 21:4 on April 27, and the Kunshan plant of Heshuo was also included in the strictest "lockdown area".

It is worth mentioning that the outbreak of the new crown epidemic in Pegatron's Guishan factory in Taoyuan, Taiwan, is expected to be confirmed by about 2600,500 employees in the factory. The plant has already been asked to stop work for 5 days.

On April 4, Dagong (Shanghai) Computer Co., Ltd., a 13% owned subsidiary of Apple Macbook foundry Quanta, announced that in order to cooperate with Shanghai's local epidemic prevention, it will temporarily suspend work, and the resumption time is still uncertain.

After the introduction of Shanghai's policy to promote the resumption of work and production of relevant key enterprises, on April 4, Quanta Shanghai Manufacturing City in Songjiang, Shanghai, on the basis of implementing various epidemic prevention measures, Quanta Shanghai Manufacturing City F16 and F1 factories resumed work and production in an orderly manner.

According to the data, Quanta Shanghai Manufacturing City has a total of 8 factories and more than 40000,1 employees. The F500 plant, which produces automotive parts, employs about 3 people, and the F1500 plant, which produces notebook computers, with about <>,<> employees.

In addition, the Kunshan factory of notebook OEM Compal also announced the temporary suspension of work due to local epidemic control. According to the data, nearly half of Compao's laptop production is in the Kunshan factory. At the same time, Compal is also an important member of Apple's supply chain, and has manufactured iPhone, iPad, Apple Watch and other products for Apple.

Apple accelerates manufacturing in India

Over the past years, Chinese mainland has been the world's largest consumer electronics manufacturing base, with the most comprehensive and complete industrial chain. However, it is undeniable that with the rapid development of the mainland economy, manufacturing costs are also increasing, which has forced many manufacturers to move to Southeast Asian countries such as India and Vietnam with lower manufacturing costs to maintain their product competitiveness.

Especially after the outbreak of the Sino-US trade war in early 2019, Samsung, Apple and their supply chain manufacturers once showed a trend of accelerating their relocation.

For example, in May 2019, Samsung also announced that it would invest 5 billion Indian rupees (about US$250 million) to expand production in India and build two new factories to produce smartphone displays and batteries. Before that, Samsung also built the world's largest mobile device factory in the Indian city of Noida. In October 3, Samsung closed its last smartphone factory in China, and Samsung said at the time that it would move its Huizhou mobile phone factory to Vietnam.

Apple foundry Heshuo also revealed at the earnings conference at the time that it was planning to withdraw the mainland's production line to Taiwan or transfer it to Southeast Asia for production to avoid the impact of the Sino-US trade war. Taiwanese factories such as Compao, Wistron, Taijun, Meilu, Catcher, and Inventec, which are also part of Apple's supply chain, also have plans to withdraw their production lines from the mainland. These factories cover Apple's assembly, chassis, PCB and acoustic components, which have a greater impact on Apple's supply chain.

Then, at the end of 2019, the new crown epidemic first broke out in Chinese mainland, and Apple and its related supply chain manufacturers began to further accelerate the layout of manufacturing in India in response to the impact of the epidemic, and shifted part of the Chinese mainland's production capacity to India. However, with the rapid control of the Chinese mainland epidemic in the first half of 2020 and the return of related production to normal, and since then due to the outbreak of Southeast Asian countries such as India, Apple has slowed down the pace of expanding manufacturing in India.

However, with the re-outbreak of the Chinese mainland epidemic since the beginning of this year, especially the continuous lockdown measures in Shanghai, Suzhou, Kunshan and other places, Apple supply chain enterprises have been greatly affected by the shutdown of large-scale enterprises. At this time, the Indian manufacturing industry has already resumed production, which has once again prompted Apple and its supply chain manufacturers to accelerate the pace of manufacturing in India.

In early March this year, foreign media reported that Apple is ready to transfer 3%-7% of iPhone 10 to India production, part of which will be used to supply the local market, and the rest will be exported to other markets for sale. Previously, Apple mainly produced iPhone SE, iPhone XR and iPhone 12 models in India.

On April 4 this year, Apple officially announced that it had begun production of its best-selling iPhone 11 smartphone at its Foxconn factory in Sriperumbudur, India. Apple said in a statement: "We are excited to begin manufacturing the iPhone 13 in India, which has a beautiful design, an advanced camera system for taking stunning photos and videos, and the incredible performance of the A13 Bionic chip – serving our local customers right in India." ”

Recently, according to foreign media reports, Foxconn has obtained approval from the local government to increase the number of employees in some factories in India to increase production and meet the increasing demand for iPhones in the local market.

Meanwhile, Apple and Foxconn have also obtained permission from the Tamil Nadu government to develop the site of a Foxconn plant near Chennai, according to the Economic Times of India. The factory covers an area of more than 40 acres, about 16,<> square meters. The move is seen as Apple's intention to further expand the manufacturing of its products in India.

According to the data, 95% of Apple's iPhone and most of its Mac products are currently made in China. Since 2021, Apple has been increasing its share of iPhones produced in India and exporting some of its models. According to market research firm Counterpoint Research, India's share of Apple's global production has grown from 2020.1% in 3 to 2021.3% in 1. And as Apple further increases its manufacturing in India, this share will continue to expand in the future.

Editor: Xinzhixun - Ronin Sword