Foxconn factories shutter due to coronavirus, stirring concerns about Apple product delays

As leaders and businesses attempt to mitigate the spread of the coronavirus, Chinese companies are closing down shop. Foxconn, maker of iPhones and other smartphones, has stopped “almost all” of its production operations in China, according to Reuters. The company joins others with Chinese factories that were told to close down until at least February 10. Should the delay in manufacturing continue, fears of disrupted iPhone production could soon be realized.

Shuttering factories — In Suzhou (in East China) and Shanghai, factories were instructed to close until February 8 and 9, respectively. The more bustling southern province of Guangdong was told not open until February 10, and a Reuters source is concerned about longer delays.

“What we are worried about is delays for another week or even another month. It definitely will have an impact on the Apple production line,” the source said, also stating Foxconn’s ability to reopen is “up to the instructions given by central and provincial governments.”

Making it work — For now, the company is shuffling the workload around to factories in Vietnam, India, and Mexico. Foxconn anticipates they can get back on track with some overtime should the factories reopen on schedule.

In Hubei, at the heart of the outbreak, Foxconn is paying employees their regular wages to stay at home and report their health status to their managers daily. Those found not complying would be “severely punished,” according to a memo Reuters reviewed, and there’s even a paid tip line for snitching on your coworkers.

Losing faith — Apple has a fairly diverse supply chain, so it should be able to weather this storm. Even so, the company hedged on revenue estimations in a recent earnings call, due to the outbreak. Despite otherwise great news in the earnings report, pandemic fears stoked a 5 percent drop in Apple’s stock.

The current fatality rate for the coronavirus is 2 percent, and the majority of deaths occurred in the elderly or coincided with other illnesses.