Foxconn, an Apple (AAPL stock) supplier, saw its stock price drop on Monday following allegations that the company was having difficulty controlling a Covid outbreak at its Zhengzhou facility in mainland China. Zhengzhou is the world’s largest iPhone assembly location.
Foxconn (2317.TAIWAN), also referred to as Hon Hai Precision Industry, had its share price drop by 1.4% by the time trading in Taiwan came to a close on Monday.
According to The Wall Street Journal, employees at Foxconn’s Zhengzhou facility have been in a “closed-loop” system for almost two weeks due to a Covid outbreak at the site. This has restricted employees’ contact with the outside world and led to complaints over a chaotic system for distributing food and other essentials. Over 200,000 people are employed by Foxconn in the city of Zhengzhou.
After videos on social media appeared to show some workers leaving the site over the weekend, Foxconn issued a statement on Sunday saying that it is providing transportation for staff who choose to return home. The statement came after the videos. The business stated that it was making efforts to guarantee the health and safety of its personnel, and the facility did not lack any medical supplies or other essentials for day-to-day operations.
“The management of the Zhengzhou park, which is run by the Group, is, in collaboration with the government’s efforts to avoid epidemics, progressively coming under control. According to Foxconn’s statement, “The Group will also coordinate back-up production capacity with our other parks in order to reduce any potential damage.”
According to a source familiar with the situation, Reuters reported on Monday that the disruption might cause iPhone production at the location to drop by as much as 30 percent in the month of November. Foxconn has declined to comment on the report, although the company has stated in the past that production levels at the site are consistent and that it is maintaining its operating outlook for the current quarter.
In trading prior to the opening of the market on Monday, shares of Apple (AAPL stock) fell by 0.6%.
Featured Image – Megapixl © Streetka2004