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Analyst Kuo Warns of Significant iPhone Production Delays Due to Coronavirus

Analyst Kuo Warns of Significant iPhone Production Delays Due to Coronavirus

Well-connected Apple industry analyst Ming-Chi Kuo on Sunday warned investors of significant iPhone production delays due to the impact of the coronavirus epidemic.

In the note (shared by MacRumors) Kuo provided the status of several major Apple suppliers as workers prepare to return to work at several Apple production partners’ plants.

Foxconn’s Zhengzhou site, which produces the iPhone 11 and is expected to be the main production facility for the upcoming lower-cost iPhone, is seeing significant delays. Production at the plant was originally expected to resume February 2 but has instead resumed today, with only 10% of workers returning today.

A Reuters report says the company’s request for its Shenzen plant to reopen was denied by the Chinese government, following an inspection finding issues with the plant’s poor airflow and use of central air conditioning. However, Chinese authorities say they have not blocked Foxconn from resuming production.

Officials say production at the facility will restart when inspections have been completed, and Foxconn has submitted coronavirus prevention proposals. Employees will be required to wear masks, undergo temperature checks, and adhere to a dining system considered safe, officials said in a statement.

“We will announce to the public the company’s production resumption situation in a timely manner,” it added.

iPhone production had been moved to Foxconn factories in Taiyuan and India because of the delays in China, but production capacities are limited in those locations.

Apple’s other iPhone assembly partner, Pegatron, resumed production of the iPhone 11 at its Shanghai factory on February 3, with a labor return rate of 90%. However, Kuo believes that the labor rate will fall to 60 – 70% as he expects many factory employees to resign after they get paid in February.

Pegatron’s Kunshan factory, which is expected to handle some of the production of Apple’s upcoming lower-cost iPhone, was scheduled to resume production on February 10, but the reopening has been postponed “at least several days” with an estimated labor return date of 40 – 60% when it reopens.

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