Apple's iPhone production could be hamstrung due to a COVID-induced worker exodus at Foxconn, its biggest supplier

• Workers are fleeing from Foxconn, China's largest iPhone factory, amidst a COVID outbreak.
• Events at the plant could impact Apple's output in November by almost 30%, according to Reuters.

Frustrated workers are fleeing one of China's largest iPhone factories amid a COVID-19 outbreak that has sent it into lockdown — and that could hinder future production of the ubiquitous device.

The factory, operated by Taiwanese electronics manufacturer Foxconn Technology Group, is located in the central Chinese city of Zhengzhou. It's colloquially known as 'iPhone City' and produces about half of Apple's global supply of iPhones, according to The New York Times. Components for the iPhone are shipped from locations spanning from Europe to Asia and assembled at the factory, according to Bloomberg.

However, Reuters reported on Monday, citing a person with direct knowledge of the matter, that events at Foxconn's Zhengzhou plant could cut Apple's November output by as much as 30%.

The Zhengzhou Foxconn factory went into a closed-loop system after COVID-19 cases began emerging in mid-October. That means workers have not been allowed to leave the premises and are tested regularly. It's one of the ways factories have continued to operate under China's strict COVID-19 restrictions.

Only workers on the production lines were given meal boxes. Other workers, particularly those infected with the virus, were provided with basic sustenance like bread and instant noodles. Hungry, and socially isolated, many workers have since been climbing over fences and walking down highways to leave the plant.

Complimentary Tech Event

Transform talent with learning that works

Capability development is critical for businesses who want to push the envelope of innovation.Discover how business leaders are strategizing around building talent capabilities and empowering employee transformation.Know More

The development at Foxconn comes as Apple has already been struggling with iPhone sales.

The company released its iPhone 14 this September as demand for global electronics began to decline worldwide. It's already tempered down its planned production of iPhones after seeing slowing demand.

After releasing its earnings report last week, Apple noted that it sold fewer iPhones than expected in its fourth quarter.

This isn't the first time that production at a Foxconn factory has been disrupted due to COVID-19 this year.

In July 2022, the Foxconn factory in the southeastern Chinese city of Shenzhen was instructed to set up a closed-loop system by city officials. Likewise, in March 2022, an uptick in COVID-19 cases led to the temporary closure of a Foxconn factory in Shenzhen, China. Foxconn subsequently implemented closed loop measures that month, too.

While the majority of Apple's manufacturing takes place in China, the company has been taking efforts to broaden its global production footprint.

Over the past few years, Apple has been manufacturing a small percentage of its phones in India and Vietnam.

In September, JPMorgan analysts noted that the company could move 25% of its iPhone production to India by 2025.