Extension of Foxconn Factory Standstill Likely to Hit Apple Deliveries

Foxconn, the largest contract electronics maker in the world, envisions there could be a “big” impact on production, which may lead to disruption of shipments of products to clients if the closure of Chinese factory due to the outbreak of coronavirus extends to the second week, said a source closely connected to this matter.

Foxconn, a Taiwanese company, makes smartphones for many brands, which includes big brands such as Apple. According to the source, the company has stopped “almost all” production in China after a directive from the government that ordered all the companies to shut operations till at least February 10.

China has issued notices in different parts of the country to keep the factories closed to curtail the spread of the communicable coronavirus, declared by the World Health Organization as a global health emergency. In Suzhou, one of the largest manufacturing centers, businesses have been directed to remain closed until February 8 and in Shanghai till February 9. Factories located in the southern industrial hub of Dongguan in export-oriented Guangdong province have been asked to remain closed.

On Monday, a source directly related to the matter told Reuters that Taipei-based firm had till now seen a “fairly small impact” due to the outbreak; the company was trying to minimize the impact by filling the gap utilizing its production centers in other countries including Vietnam, India, and Mexico. The source additionally said that the firm could make up for the time lost if the factories are made to work overtime after they resume work.

In Eastern China’s Suzhou, one of its largest manufacturing hubs, companies have been told to stay shut until at least February 8 and in Shanghai until February 9. Factories in the southern manufacturing hub of Dongguan in export-oriented Guangdong province have also been told not to open before February 10.

The source said that

What we are worried about is delays for another week or even another month. The impact would be big. It definitely will have an impact on the Apple production line.

The source skeptically stated,

The tricky question is whether we will be able to resume production (on February 10)…It’s up to the instructions given by central and provincial governments.