Foxconn Restarts Shenzhen Factory in “Closed Loop”
17 MARCH 2022 - Well that was fast. Just a couple of days after closing down its factory in Shenzhen, a piece from 9 to 5 Mac says Foxconn has fired the plant back up.
Wait: Wasn’t Shenzhen supposed to be locked down to keep a regional resurgence in COVID cases from spreading? A few days ago we heard from Apple Insider that:
With the exception of companies supplying food, fuel, and essential goods or services, all businesses were ordered to close or implement work-from-home policies. It is expected that the lockdown will persist until March 20 at the earliest.
How is Foxconn going around that? Apparently by not letting its employees go anywhere. While Shenzhen is still in lockdown, 9 to 5 Mac says government officials have given Foxconn an exemption to resume operations using the “closed loop” employed by companies in Wuhan when the pandemic started. 9 to 5 Mac says:
‘Closed loop’ in this context means that the employees live on-site in company accommodation and move between housing and factory without leaving the campus.
Apple Shares Up After Factory Reset
The markets were up across the board on Wednesday, so reopening the Shenzhen facility was probably not the only factor sending Apple shares up. At the same time, didn’t hurt. A piece from Barron’s (via Apple News+) credits the Foxconn factory with at least some of that rise. The piece had Wedbush analyst Daniel Ives commenting on the reopening. Quoting the analyst:
This is a shot of much-needed good news in the arm for Apple after some nervous times since the Covid China shutdown… The supply chain needs all the good news it could get, and this averted a mini-disaster for Apple’s iPhone production for now.
Ives has an “Outperform” rating on Apple shares. His price target on the shares is $200.
Also quick with a response was Evercore analyst Amit Daryanani. Of course, he wasn’t worried before and a lot of the note posted Wednesday by Apple 3.0 seriously appeared to have been cut-and-pasted from a note posted a day earlier.
Eh. We’ve all done it.
Quoting the new part of his note addressing the reopening, Daryanani said:
While we suspect the site is operating at limited capacity it is important to note: a) the site accounts for a fraction (20-25%) of iPhone production, Apple’s main production site in Zhengzhou (aka iPhone City) has not been affected.
“b)” and “c)” were the cut-and-pasted parts:
b) the shutdown is occurring during a time when seasonal demand is lower, which should mitigate any impact, and c) Foxconn has implemented mitigation plans to shift production to other sites to limit disruption.
Daryanani has an “Outperform” rating on Apple shares. His price target on the shares is $210.
