Apple said Covid restrictions have “temporarily impacted” production at the world’s largest iPhone factory in central China, warning that customers will now face longer wait times ahead of the holiday season.
Foxconn, Apple’s principal subcontractor, locked down its massive factory in Zhengzhou last month after a spike in infections — in line with China’s zero-Covid policy.
In a separate statement Monday, the Taiwanese firm said its fourth quarter earnings this year would take a hit from the coronavirus lockdowns.
Panicking workers last week had fled the site on foot in the wake of allegations of poor conditions at the facility, which employs hundreds of thousands of workers.
“Covid-19 restrictions have temporarily impacted the primary iPhone 14 Pro and iPhone 14 Pro Max assembly facility located in Zhengzhou, China,” California-based Apple said in a statement late Sunday.
“The facility is currently operating at significantly reduced capacity.”
Despite strong demand for Apple’s products ahead of the holiday season, “we now expect lower iPhone 14 Pro and iPhone 14 Pro Max shipments than we previously anticipated”, it said.
“Customers will experience longer wait times to receive their new products.”
Foxconn is China’s biggest private sector employer, with over a million people working across the country in about 30 factories and research institutes.
But Zhengzhou is the Taiwanese company’s crown jewel, churning out iPhones in quantities not seen anywhere else.
“In a normal situation, almost all the iPhone production is happening in Zhengzhou,” Ivan Lam, an analyst with specialist firm Counterpoint, told AFP.
The company was initially “cautiously optimistic” about its fourth quarter earnings, it said.
“But due to the pandemic affecting some of our operations in Zhengzhou, the company will ‘revise down’ the outlook for the fourth quarter,” Foxconn said in a statement.
“Foxconn is now working with the government in (a) concerted effort to stamp out the pandemic and resume production to its full capacity as quickly as possible,” the company said.
It did not give any statistical projection for how badly they expected earnings to be hit.
– ‘We are drowning’ –
Local authorities locked down the area surrounding the factory on Wednesday, but not before reports emerged of a lack of adequate medical care at the plant.
Multiple workers have recounted scenes of chaos and increasing disorganisation at Foxconn’s complex of workshops and dormitories, which form a city-within-a-city near Zhengzhou’s airport.
“People with fevers are not guaranteed to receive medicine,” another Foxconn worker, a 30-year-old man who also asked to remain anonymous, told AFP.
“We are drowning,” he said.
China is the last major economy wedded to a strategy of extinguishing Covid outbreaks as they emerge, imposing snap lockdowns, mass testing and lengthy quarantines despite the widespread disruption to businesses and international supply chains.
And authorities poured cold water on speculation that the policy could be relaxed Saturday, with National Health Commission (NHC) spokesperson Mi Feng saying that Beijing would “stick unswervingly to… the overall policy of dynamic zero-Covid”.
“At present, China is still facing the dual threat of imported infections and the spread of domestic outbreaks,” Mi said at a press briefing.
“The disease control situation is as grim and complex as ever,” he said. “We must continue to put people and lives first.”
IBM to cut 3,900 jobs as it reorganizes business
IBM will slash some 3,900 jobs, slightly more than one percent of its workforce, related to businesses it has divested, a source close to the matter told AFP on Wednesday.
The computing company based in New York state did not talk of job cuts in its quarterly earnings report published Wednesday, however, nor in a call with analysts to discuss the financial results.
IBM said it would take a one-time $300 million charge in its first quarter this year, which the source said was related to the layoffs.
This cost is “entirely related” to the spin-off of Kyndryl and the disposal of health data and analysis businesses, an IBM spokesperson told AFP.
“It is not an action based on 2022 performance or 2023 expectations,” the spokesperson added.
The more than century old technology firm reported profit of $2.9 billion in the final three months of last year, some 17 percent higher than the same period in 2021 despite revenue remaining flat at $16.7 billion.
“Clients in all geographies increasingly embraced our hybrid cloud and AI solutions as technology remains a differentiating force in today’s business environment,” IBM chief executive officer Arvind Krishna said in an earnings release.
The company founded in 1911 announced late last year that it will invest $20 billion in semiconductors, quantum computing and other cutting-edge technology in New York state.
Krishna unveiled the spending, which will take place over a decade, in a speech alongside US President Joe Biden in the tech giant’s Poughkeepsie facility.
Biden hailed the pledge from the “iconic American company” as another sign that his strategy of rebuilding the US innovative edge is working.
The Democratic president has made a priority of encouraging growth in high-tech manufacturing, hoping to rebuild domestic supply chains in crucial components such as microchips that for years have been left to foreign companies based as far away as Taiwan.
Meanwhile, tech giants have been tightening belts and laying off workers to endure tough global economic conditions and a return to pre-pandemic lifestyles less dependent on internet services.
Amazon, Meta, Microsoft and Google’s parent company Alphabet have all recently laid out plans to reduce workforces, after hiring heavily during the pandemic to meet increased demand for digital services.
Amsterdam unveils its largest bike garage. It’s underwater
Plagued by ever-shrinking space to park its hundreds of thousands of bicycles, Amsterdam opened Wednesday the first of its largest-ever bicycle parking complexes, built underwater in a pioneering engineering project.
The shelter is constructed beneath the Open Haven Front, an access tributary to the city’s IJ river, and will be followed by another next to the IJ itself that will open in February.
They will have a combined capacity for 11,000 bikes in the cycling-mad Dutch capital.
“Together the shelters will be the largest in the city,” the Amsterdam municipality said, with the Open Haven Front storage able to take 7,000 bicycles and the IJ-side site around 4,000.
Construction started in 2019 and involved draining part of the Open Haven Front next to Amsterdam Central Station.
A time-lapse video posted by the Amsterdam municipality showed how the water was pumped out, the structure built and the area eventually reflooded.
“We have a lot of knowledge and expertise when it comes to water,” Dutch deputy infrastructure minister Vivianne Heijnen told AFP at the opening ceremony.
This storage “makes optimal use of the space you have in a small country”, she said.
Conveyor belts take cyclists nine metres (30 feet) below ground level, according to wUrck, the architectural firm that designed the ultramodern parking spaces that aim to evoke their oceanic surroundings.
“The cyclist steps into an imaginary oyster with a rough exterior of basalt and natural stone and a smooth, light interior,” the firm said in a statement.
“Now you will be assured that you can immediately park your bicycle when you come to Amsterdam station,” the city’s transport alderwoman Melanie van der Horst said.
There are an estimated 900,000 bicycles in Amsterdam with some 625,000 trips made daily, according to the city’s 2021 Bicycle Monitor plan — and finding proper parking has long been a headache.
Boeing reports Q4 loss but reaffirms 2023 targets
Persistent supply chain woes and staffing issues led to another quarterly loss at Boeing, but the company on Wednesday confirmed its 2023 outlook amid strong aviation demand.
Boeing said its commercial plane business was dented by “abnormal costs,” while “labor instability and supply chain disruption” weighed on its defense, space and security unit.
The company’s $634 million loss for the quarter ending December 31 was smaller than the $4.1 billion loss in the same period last year. Revenues rose 35 percent to $20 billion, but came in below analyst forecasts.
The aviation giant, which has been beset in recent years with production problems and certification delays following the 737 MAX crashes, nevertheless finished 2022 with positive free cashflow for the first time since 2018 as it reaffirmed 2023 targets.
“We had a solid fourth quarter, and 2022 proved to be an important year in our recovery,” said Boeing Chief Executive Dave Calhoun.
“Demand across our portfolio is strong, and we remain focused on driving stability in our operations and within the supply chain to meet our commitments in 2023 and beyond.”
Boeing has said it expects to return to a level of financial strength comparable to its pre-pandemic state around the 2025-26 timeframe.
The company’s turnaround has been aided by robust demand for commercial planes as airlines struggle to meet pent-up demand for flying and replace older planes with newer jets that burn less energy and release fewer carbon emissions.
But efforts to ramp up output have been hindered by snags in garnering key parts and materials, including delays in receiving engines from key suppliers.
Calhoun, in an interview with CNBC, said suppliers have made progress in hiring more staff, but are still working through the process to be able to increase output.
“You have to train,” Calhoun told the network. “Every one of these products are pretty sophisticated.”
He predicted that 2023 would remain “bumpy” as far as the supply chain, but said the ramp-up was aided by shared knowledge that demand for aviation remains strong.
Boeing has resumed deliveries of the 787 Dreamliner after a lengthy halt, and confirmed it would increase production in 2023 from the current “low” level.
The company expects to deliver 70-80 Dreamliners in 2023, up from 31 last year. Boeing is eyeing 400-450 deliveries of 737s, compared with 387 in 2022.
– Breakthrough in China? –
A key unknown facing the company is the degree to which it can expect bankable revenues from China after a lengthy pause in deliveries of 737 MAX planes while the country maintained strict Covid-19 policies.
Boeing executives have previously suggested the suspension was a reflection at least in part of the tense state of US-China relations.
China was the last major market to clear the MAX to return to service after a global grounding following two fatal crashes.
On January 13, a 737 MAX operated by China Southern Airlines undertook the first flight by a MAX plane in the country since March 2019.
Calhoun told CNBC that he expects progress over the next six months in moving the 100 MAX planes already in China back into the air, but that he wouldn’t engage in a “guessing game” about when deliveries of new planes could resume.
The Boeing CEO said he was “optimistic and constructive” around the market given the reopening Chinese economy, but that he didn’t have “rose colored glasses on.”
Shares of Boeing fell 2.2 percent to $207.24 in early trading.
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