Despite fulfilling massive quantities of iPhone orders, Foxconn has been experiencing some trouble lately at its Zhengzhou plant. From ongoing protests, to supply chain disruptions, these setbacks have caused Apple to lose out on millions in iPhone 14 Pro and iPhone 14 Pro Max shipments. While certain events are not in the control of many companies, the ramifications of these incidents mean that Foxconn may not be the exclusive assembler of iPhone 15 Pro and iPhone 15 Ultra models next year.
Foxconn Likely to Receive the Bulk of Orders, but Apple Still Intends to Minimize Risk by Shifting Orders Away From Its Chinese Partner
With analyst Ming-Chi Kuo estimating that Apple may lose up to 20 million shipments of iPhone 14 Pro and iPhone 14 Pro Max models in the fourth quarter this year, he also states that Foxconn may lose out on exclusive orders for the high-end iPhone 15 lineup.
“In addition to facing the challenge of lower-than-expected iPhone shipments/revenue in 4Q22, it will also be difficult for Hon Hai to continue to be the exclusive assembler of the iPhone 15 Pro series because Apple wants to diversify supply risks.”
Apple’s reported decision was no surprise, given that for weeks, Foxconn’s largest iPhone assembling plant in China was subjected to production halts. First, it was due to a rise in COVID-19 cases, and the extra measures did not sit well with employees, forcing them to storm out of the facility and start rioting in the region. To make up for lost shipments, Pegatron and Luxshare will fulfill 10 percent of Apple’s iPhone 14 Pro and iPhone 14 Pro Max orders, but these may arrive in late December.
In any case, Apple is attempting to minimize further risk, which means that Pegatron and Luxshare are likely to increase hiring and upgrade their own assembling facilities to take on additional iPhone 15 Pro and iPhone 15 Ultra orders. Additionally, the technology giant has shifted production away from China to places like Vietnam and India. Unfortunately, the Zhengzhou remains the largest iPhone assembling facility at this time, producing 70 percent of the world’s iPhones and employing around 200,000 people.
Needless to say, it will take a while before Apple can significantly reduce its dependency on China.
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