China Factory Shutdown Could Impact iPhone Shipments

The closing of Foxconn’s factory in Taipei over the outbreak of the Coronavirus could affect iPhone production, Reuters reported on Monday (Feb. 3), citing sources.

Foxconn produces iPhones and other smartphones for Apple and other brands. The factory in Taipei was among many in China instructed to close down and halt production, at least until Feb. 10. The closure could affect phone shipments to Apple and others.

Foxconn is the biggest contract electronics maker worldwide. The source told Reuters that the virus outbreak and factory closing have had a “fairly small impact,” since the company was able to step up production in Vietnam, India and Mexico.

Companies in eastern China’s Suzhou – a major hub for manufacturing – were informed that they had to remain closed until at least Feb. 8, while in Shanghai closures are required until Feb. 9. Factories in Dongguan and Guangdong in the southern region of China must remain shut until Feb. 10.

If Foxconn’s closure moves beyond Feb. 10, shipments could be affected. “What we are worried about is delays for another week or even another month. The impact would be big,” the source said. “It definitely will have an impact on the Apple production line. The tricky question is whether we will be able to resume production (on Feb. 10) … It’s up to the instructions given by central and provincial governments.”

Foxconn told employees and clients in Hubei, the center of the coronavirus outbreak, not to return to factories. Employees were also advised to talk to their managers daily about the state of their health, according to a Feb. 1 internal memo reviewed by Reuters.

Employees who follow the rules will be paid, Foxconn said, but those who don’t comply will be “severely” punished. A hotline was established offering a 200 yuan ($29) reward for anyone who reports a rule-breaker, the memo said.

Although eCommerce in China hasn’t s far been affected by the coronavirus, if supply chains are disrupted, the ripple effects may cause inventory to be delayed.