iPhone Maker Foxconn Restarts Production in Shenzhen As Lockdown Partially Lifts

[MacRumors]

Apple's primary iPhone assembler Foxconn says it has resumed production at its Chinese manufacturing plant in Shenzhen, following a partial lifting of the city-wide lockdown that came into effect on Monday.

The Taiwanese company told Reuters it had restarted some production and operations at its Shenzhen campus after meeting government conditions for staff to live and work in bubble arrangements and adopting a "closed-loop management" system.

The system was used successfully during the Winter Olympics in Beijing and kept event personnel tightly sealed off from the public, with regular testing for those within.

"Some operations have been able to restart and some production is being carried out," Foxconn said in a statement, adding that the system at its Shenzhen facilities subjected employees living there to the required health measures.

"This process, which can only be done on campuses that include both employee housing and production facilities, adheres to strict industry guidelines and close-loop management policies issued by the Shenzhen government," it added.

It's not known which Apple products Foxconn produces at its two Shenzhen plants, but Foxconn is the largest maker of the iPhone. Manufacturers in Guangdong province, home to Shenzhen, said factory shutdowns have caused lags in deliveries, while logistical difficulties were making it harder to ship goods to overseas customers.

Foxconn on Wednesday conceded that 2022 would be "challenging" for the supply chain and forecast an up to 3% fall in revenue for the year – its first annual sales decline in six years – as a shortage of chips squeezes smartphone production and the pandemic shows no sign of easing in China.

Apple said the chip shortage cost it $6 billion in the last quarter of 2021, but predictions remained bullish for this year despite these strains on the global supply chain. That's despite Foxconn's warnings that the chip shortage is expected to run into the second half of 2022.

Article Link: iPhone Maker Foxconn Restarts Production in Shenzhen As Lockdown Partially Lifts

 

[tridley68]

Timmy time to look for another supplier instead of being dependent on one place like maybe a factory in the United States.

 

[jlc1978]

Timmy time to look for another supplier instead of being dependent on one place like maybe a factory in the United States.

The problem is labor costs and availability. However, as SOCs become more prevalent and incorporate more of what once was done with discrete chips it may become more feasible since less labor would be required and a product could be designed for automated production.

A more likely short term solution is offshoring in more locations.

 

[Dwalls90]

The problem is labor costs and availability. However, as SOCs become more prevalent and incorporate more of what once was done with discrete chips it may become more feasible since less labor would be required and a product could be designed for automated production.

A more likely short term solution is offshoring in more locations.

Yep. With the capilistic mindset of America, until people take priority over profits, manufacturing will continue to be offshored. The same folks complaining that we should bring manufacturing back to America also do not want to pay double or triple for the price of their Apple products, and something has got to give (hint: it's not going to be Apple's profits).

 

[DelayedGratificationGene]

The problem is labor costs and availability. However, as SOCs become more prevalent and incorporate more of what once was done with discrete chips it may become more feasible since less labor would be required and a product could be designed for automated production.

A more likely short term solution is offshoring in more locations.

Agreed. It’s only a matter of time for automated production.

 

[ddtmm]

Wouldn’t be surprised if Apple had a hand in getting things going. Tim’s got a cozy relationship with the Chinese government.

 

[jlc1978]

Yep. With the capilistic mindset of America, until people take priority over profits, manufacturing will continue to be offshored. The same folks complaining that we should bring manufacturing back to America also do not want to pay double or triple for the price of their Apple products, and something has got to give (hint: it's not going to be Apple's profits).

It's not just that. You have to have a workforce with the skills to do assembly, and a large enough quantity as well. The US doesn't have that, and you can't build it overnight. Even if you could, it's not an aspirational job, since keeping costs down means salaries will stagnate and drive turnover, so you would need a constant supply of new workers. In addition, you need sophisticated assembly lines and a supply chain in place to feed JIT manufacturing. That, with automated production, is much easier to accomplish and something American companies have experience doing. It's also a path US manufacturing has been on for a long time.

 

[hugodrax]

The problem is labor costs and availability. However, as SOCs become more prevalent and incorporate more of what once was done with discrete chips it may become more feasible since less labor would be required and a product could be designed for automated production.

A more likely short term solution is offshoring in more locations.

Tired of the same old excuse about labor costs. A 5000 dollar computer only a small fraction is labor costs. It’s all about maximum profits at the long term expense of the Country and future generations.

Even more salt to the wound is when you order equipment costing over 500K and it’s made in China. Same stuff that used to be made here and actually cost less in the past.

We used to make everything in the US and people were able to afford things in fact someone a few years out of high school would be able to purchase a home and retire in the future.

 

[hugodrax]

It's not just that. You have to have a workforce with the skills to do assembly, and a large enough quantity as well. The US doesn't have that, and you can't build it overnight. Even if you could, it's not an aspirational job, since keeping costs down means salaries will stagnate and drive turnover, so you would need a constant supply of new workers. In addition, you need sophisticated assembly lines and a supply chain in place to feed JIT manufacturing. That, with automated production, is much easier to accomplish and something American companies have experience doing. It's also a path US manufacturing has been on for a long time.

We used to have this until Stateless corporations and CEOs decided to send our manufacturing capacity to China, A country that does not believe in democracy and wants to turn every country into a Chinese Vassal state.

 

[Villarrealadrian]

What! It only lasted 3 days!

 

[JosephAW]

It’ll be interesting to see how the shortage of neon will affect the chip production this year.

 

[grjj]

Profit is, if at all, a very small reason to outsource manufacturing. Fact is the US just doesn't value the skills required to build and maintain the factories needed to build devices like iPhone.
Tim has pointed out that there are relatively few tool and die tradespeople in the US compared to China. The numbers in from the BLS site says there are under 500,000 tool&die(T&D) and machinist positions in the US as of 2020.
Tim regularly says in interviews that you could fill entire stadiums with T&D skilled employees in China.

I don't think most people understand the immense scale of the facilities and the complexity of the machines required to manufacture, literally, over 100,000,000 devices a year. To put that in perspective: it's almost 200 units a minute rolling off the assembly lines every minute of every day without stopping for shift changes, power loss, component shortage or machine failure.

Is there an argument that Apple should bring at least SOME manufactuting to the US? Sure. And they've been testing the waters with the Mac Pro for a few years now and I've read scattered reports of major issues with quality control in that facility. But to do this for a larger scale product would require re-structuring the supply chain to move massive amounts of raw components (PCBs, Displays, Batteries, cases, etc.) to the US for assembly and packaging instead of sending the finished products. That will take more space and cost to protect them in transit.

It's a quite complex when you start digging into the logistics of labor, shipping, parts availability, talent availability and all the other small stuff behind the scenes that most people never think about.

 

[supercoolmanchu]

Profit is, if at all, a very small reason to outsource manufacturing. Fact is the US just doesn't value the skills required to build and maintain the factories needed to build devices like iPhone.
Tim has pointed out that there are relatively few tool and die tradespeople in the US compared to China. The numbers in from the BLS site says there are under 500,000 tool&die(T&D) and machinist positions in the US as of 2020.
Tim regularly says in interviews that you could fill entire stadiums with T&D skilled employees in China.

I don't think most people understand the immense scale of the facilities and the complexity of the machines required to manufacture, literally, over 100,000,000 devices a year. To put that in perspective: it's almost 200 units a minute rolling off the assembly lines every minute of every day without stopping for shift changes, power loss, component shortage or machine failure.

Is there an argument that Apple should bring at least SOME manufactuting to the US? Sure. And they've been testing the waters with the Mac Pro for a few years now and I've read scattered reports of major issues with quality control in that facility. But to do this for a larger scale product would require re-structuring the supply chain to move massive amounts of raw components (PCBs, Displays, Batteries, cases, etc.) to the US for assembly and packaging instead of sending the finished products. That will take more space and cost to protect them in transit.

It's a quite complex when you start digging into the logistics of labor, shipping, parts availability, talent availability and all the other small stuff behind the scenes that most people never think about.

Apple could use their exceedingly bland TV channel to start training workers and help develop whatever skills they might need.

In fact the entire lack of any relevant technical content or even basic user information on Apple TV+ for using Apple products is a profound whiff for Cupertino.

If Apple really wanted to make a meaningful contribution to the world, instead dumping money into partisan political groups and fad scam causes, they could offer education content instead of vapid also-ran Hollywood fluff, and it might even later provide them with more skilled talent.

 

[CarlJ]

We used to have this until Stateless corporations and CEOs decided to send our manufacturing capacity to China, A country that does not believe in democracy and wants to turn every country into a Chinese Vassal state.

We had some of what jlc1978 is describing. China, unfortunately, as it stands now, has a much finer tuned system for producing really massive quantities of products than we ever had, both because they’ve had the extra decades of modern refinements to add, and they have an enormous population of rural residents who are willing to leave the countryside to go take moderately skilled factory jobs that involve living in company dormitories and such. Pretty sure that wouldn’t fly in the US. Most people in the US don’t understand the sheer scale of networks of factories that can turn out upwards of half a million iPhones a day, every day, year after year. That involves a complex the size of a city with hundreds of thousands of workers. We haven’t dones anything even remotely like that since WWII and even then not at anything like the same scale.

And yes, corporations have become sociopaths that would throw all their own mothers into a meat grinder if it meant more profits. They moved production to China because it cost them less and their feedback informed them that customers were mostly interested in cheaper prices (without caring what mechanisms were behind those prices getting cheaper).

We need Apple and others to work on building some really first class, high capacity, fabs here in the US. I don’t know if TSMC could be persuaded to participate in that, or if they’d see that as weakening their hand. Either way, we need it, from a secured and independence angle, not just for economics / jobs reasons. That’s one step. (Can you imagine what would happen to the American tech industry and the US in general, if an actual war broke out relatively near where the TSMC fabs are located?)

And I have a hunch that Apple may start working on manufacturing in the US, not so much to create jobs as to disentangle from dependence on China and simplify shipping and taxes and such. But I expect any brand new factories here are going to be highly automated. In part for economics but also because… well, there’s no place in the US where you could build factories of the size and layout of the ones in China and find literally hundreds of thousands of employees to work in them (I’m not saying you can’t find 100k prospective employees in the US, I’m saying you can’t get them all concentrated into a single county to work in the style of the Chinese factories).

There’s also the inevitable problem of how China will react if they see Apple start to withdraw in a major way. At the bad end of the scale, think, “messy divorce”, but between a mega corporation and a huge country, with trillions of dollars (and hundreds of thousands of Chinese jobs) at stake. Apple likely wants to tread lightly, or, at the least, not telegraph their punches.

 

[Realityck]

Timmy time to look for another supplier instead of being dependent on one place like maybe a factory in the United States.

Foxconn operates 12 different sites in China. They also operate multiple sites in Vietnam and elsewhere. So hardly one place.

 

[citysnaps]

Timmy time to look for another supplier instead of being dependent on one place like maybe a factory in the United States.

Apple manufactures via Foxconn (on the average) roughly 600,000 iPhones per day, a can quickly ramp that up or down on a moment's notice, depending on market requirements.

Where do you suggest Apple manufacture their phones/iPads/computers that can support their manufacturing requirements?

Timmy? Really? What's with the belittling/disparagement? To feel better?

 

[Rocko99991]

Stop these ridiculous lockdowns.

 

[I7guy]

[...]

If Apple really wanted to make a meaningful contribution to the world, instead dumping money into partisan political groups and fad scam causes, they could offer education content instead of vapid also-ran Hollywood fluff, and it might even later provide them with more skilled talent.

Didn't realize that "dumping money in partisan political groups" was mutually exclusive to offering "education content". I guess along the lines of add emoji or fix software.

 

[LonestarOne]

Timmy? Really? What's with the belittling/disparagement? To feel better?

He’s got a photo of Donald Trump as his icon. What do you expect?

 

[LonestarOne]

Stop these ridiculous lockdowns.

How many people are you willing to kill so you can get your products a few days sooner?

 

[jlc1978]

And yes, corporations have become sociopaths that would throw all their own mothers into a meat grinder if it meant more profits. They moved production to China because it cost them less and their feedback informed them that customers were mostly interested in cheaper prices (without caring what mechanisms were behind those prices getting cheaper).

We have met the enemy, and he is us - Pogo

 

[szw-mapple fan]

Agreed. It’s only a matter of time for automated production.

Apple tried doing this this almost a decade ago and probably decided that it wasn't worth it since it never came to anything. I remember seeing Foxconn testing automated assembly machines in one of the news reports. With all the different configurations and the precision and capacity needed for iPhone each year, it's probably going to be decades before we can completely automate assembly to be cheap enough. Even Tesla with a much higher value product went back to human assembly for a lot of their processes after trying to automate everything during the Model 3 production.

 

[szw-mapple fan]

We used to have this until Stateless corporations and CEOs decided to send our manufacturing capacity to China, A country that does not believe in democracy and wants to turn every country into a Chinese Vassal state.

The U.S. is a (very) flawed democracy and has a long history of propping up dictatorships and creating vassal states out of supposed Allies as long as it aligned with its own financial interests. If democracy was the metric for selecting where to put factories then everything would be build out of Northern Europe.

 

[Rocko99991]

How many people are you willing to kill so you can get your products a few days sooner?

Just as many as you are willing deprive liberties to.

 

[SFjohn]

A 2 day lockdown, woe is Apple… 😂