Apple’s Under the epidemic: supply chain crisis?
Our reporter / Chen Jialan / Chen Yibo / Li Zhenghao / Beijing / Guangzhou report:
Every year after the Spring Festival, Liu Wei (pseudonym) is the busiest time.
In the afternoon of March 4th, Liu Wei, who is familiar with Foxconn’s labor supply, told the China Business Daily that “Zhengzhou Foxconn currently has about 70,000 employees in the factory and recruits about 5,000 people a day.” The verification revealed that there were 46 restaurants in Zhengzhou Foxconn. 24 restaurants opened that day, and a total of 16,423 card swiping records were generated during lunch time. There were also 6,734 meal delivery records in the first quarantine area. Due to the cumbersome process of the restaurant in special times, there are also a large number of employees who choose to solve lunch by themselves.
However, according to Liu Wei, Zhengzhou Foxconn is “about 100,000 people behind”, because under normal circumstances, Zhengzhou Foxconn’s employees in the factory should be about 150,000, and it peaked at 400,000.
Zhengzhou Foxconn is the largest foundry of the iPhone. Apple CEO Tim. Cook told the media in the United States in mid-February that Foxconn plans to resume 50% of its production in mainland China by the end of February and resume 80% of its production in mainland China in March.
But Liu Wei believes that as of March 4, Zhengzhou Foxconn’s 50% return rate is unlikely.
In addition, according to Apple’s 2019 core supplier list, Apple’s global suppliers are mainly concentrated in mainland China, Taiwan, the United States, Japan, Europe, and South Korea. Other countries and regions except China are in the outbreak period. Apple The existence of a crisis in the global supply chain has attracted much attention from the industry.
The assembly plant resumed production and resumed production. According to
public data, more than 90% of Apple’s production capacity comes from mainland China. Among them, a large part of the foundry production of iPhone is in Foxconn and Pegatron. Pegatron refers to Pegatron United Technology Co., Ltd., which is a subsidiary of Changshuo Technology in Pudong, Shanghai, and is the iPhone foundry after Foxconn. Foxconn’s iPhone production capacity is mainly concentrated in Zhengzhou (90%) and Shenzhen.
In other words, the supply chain of the iPhone in the world this year, first depends on Foxconn and Pegatron, especially the performance of Zhengzhou Foxconn and Changshuo (Shanghai).
The official certification number of “Foxconn iDPBG Zhengzhou General Workers Recruitment” on February 21 shows that incumbent employees of level 2 ~ 14 of iDPBG (integrated Digital Product Business Group) have already been employed before February 29 or Employees who were on the job before February 29, but are returning to work, and who started work before March 18, will be rewarded 3,250 yuan for 60 days of service and 2,000 yuan for 90 days of service.
The reporter learned that the salary level of Zhengzhou Foxconn’s front-line employees is 6,000 yuan, that is, as long as employees who start the job at the end of February or mid-March, they can get a reward equivalent to 1/2 to 2/3 of the salary. .
Zhengzhou Foxconn encouraged old employees to return to work as soon as possible, while entrusting labor service companies to “pull people around”. The reporter learned that in the middle and late February, Zhengzhou Foxconn continued to increase its encouragement policy for labor dispatch companies to “pull people”. By the end of February, it had changed to: Recruited employees who have been registered for 35 days and issued 3300 for 60 days. RMB rebate fee; on this basis, if you have worked for 90 days, an additional 3700 yuan will be issued.
This is equivalent to each time the labor dispatch company recruits an employee who has been employed for 90 days in Zhengzhou Foxconn, its employees can get a reward of 7,000 yuan (equivalent to the monthly salary of Foxconn employees).
Even so, according to Liu Wei, due to the impact of the new crown epidemic, when the resumption of work started on February 10, Zhengzhou Foxconn started “only a few hundred people a day, (Apple CEO) Cook said (50% at the end of February, 3 At about 80% per month, about 1,000 people can be admitted every day, and now 5,000 people can be admitted each day. Currently, there are 50,000 to 60,000 people in the factory, but the number of employees in the factory is usually 100,000 to 150,000. This is the current normal level of Foxconn in Zhengzhou. Staff gap pressure remains high.
It is understood that each year Pegatron and Foxconn will have a battle in recruiting employees, and this year is no exception. The reporter was informed that, because Pegatron’s Changshuo factory is located in Shanghai, compared with Henan, which is adjacent to Hubei, the pressure of epidemic prevention in Shanghai is less, so the situation of Changshuo’s reinstatement is better. At the same time, because of the rush to start work, it is actually Pangshuo’s first shot of high rebate “grabbing”-Pangshuo recruited a new employee (90-day full service), and the employees of the labor service company could get a reward of up to 10,000 yuan.
According to surveys conducted by various reporters, in general, although the employment gap of the iPhone foundry is still very large, in view of the current epidemic prevention situation and the recruitment of employees, many people in the industry predict that 80% of the iPhone foundry’s resumption of work in March is likely to be reached.
Foxconn’s parent company recently publicly stated that according to the current progress, seasonal normal production capacity should be restored by the end of March.
On March 6, Liu Wei told reporters that the first phase of recruitment by Foxconn and Pegatron is basically completed, the recruitment pressure has eased, and the age limit has begun.
Apple is also trying to move assembly operations overseas. Foreign media published an Apple China supply chain report on March 3, revealing that as early as 2015, Apple ’s operations director suggested that “the assembly of at least one product should be transferred to Vietnam”, so that Apple could conduct “workers outside of China” Train and establish a new parts supplier system, “but was rejected by Apple executives at the time.
In the middle of last year, foreign media also disclosed that Apple has asked major suppliers to conduct an assessment. If 15% -30% of production capacity is distributed overseas, what conditions will it face? The supply chain report released by foreign media pointed out that Apple’s dependence on China’s supply chain will be difficult to change for a long time to come.
There are hidden concerns supply chain.
in the While Foxconn and Pegatron are under heavy pressure to resume production, while Apple’s global supply chain responsible for “feeding” is not optimistic. Compared with Chinese suppliers, Apple suppliers in Europe, Japan and South Korea may be more worrying.
According to South Korean media reports, Samsung Electronics ’first plant in Gumi, in the southeastern city of South Korea, has had its first confirmed case since February 21, and four cases have appeared on March 2. This has resulted in several production lines at the plant. Outage. In addition, LG Display, whose main business is display, and LG Innotek, which mainly provides cameras, were also affected by the epidemic.
Samsung and LG suppliers in mainland China told reporters that the current anti-epidemic measures in South Korea are to stop production and stop production, and carry out comprehensive disinfection and anti-virus. After two or three days, they resume production and resume production. The problem is that, like Samsung Electronics’ Gumi plant, a case occurs every few days, which requires continuous shutdown and production, which still has a great impact.
According to Apple’s 2019 list of 200 core suppliers, its suppliers are 41 in mainland China, 46 in Taiwan, 38 in the United States, 38 in Japan, 18 in Europe, and 11 in South Korea. Outbreaks have basically occurred in these countries and regions. For example, in South Korea, Samsung Electronics and Samsung SDI, as well as LG Display and LG Chemical of LG, are Apple’s core suppliers. In addition, ST Microelectronics, headquartered in Italy, the hardest-hit area in Europe, is also one of the companies in Apple’s supply chain that is worrying.
Executives of Apple’s core suppliers in Shandong told reporters on March 4 that the company’s factories related to Apple’s business are mainly in Shandong and overseas, including 50,000 people in Shandong headquarters and 10,000 overseas factories. At present, the majority of employees at the Shandong factory are from the province. Most of the employees from other provinces have not yet returned to work. The overall return rate is less than 70%. Chinese employees of overseas factories also need to be isolated for 14 days after arriving at the company.
The executive believes that the biggest challenge of the current Apple supply chain is that the assembly plant has not been fully started. As a spare parts supplier, the order data from the assembly plant can always be seen to fluctuate continuously, but so far there has been no so-called “cut order”. Behavior, the supply chain is still working as planned.
Liu Wei told reporters that Apple’s upstream supplier companies are also extremely scarce. According to his understanding, like a successful company, a human resources supplier can send dozens of people a day. “In total, he is a dozen manpower suppliers in a factory area. On average, he sends dozens of people, too few.” Li Chengwei, an independent observer of the labor service industry and the founder of the labor service teahouse, told reporters that compared to the fifteenth day of the past There is almost no one’s situation. After the holiday this year, labor is a protracted battle. It is expected that the company will continue to recruit until the end of March and early April.
An insider of Apple’s core supplier, Lansi Technology , told reporters that the company’s orders are saturated, so human resources requirements have doubled compared with previous years-about 100,000 people are required, but currently employees on the job can meet Existing capacity requirements, and the recruitment of employees for new capacity requirements in the new park is stepping up.
Cisco Blue technology mainly for the iPhone glass back cover. Liu Wei revealed that after the Spring Festival, Lansi Technology is not a high-priced recruiter, but Lansi Technology is very urgent in recruiting people. Recently, the local government has rushed to the village in order to “pull people” to Lansi Technology Factory in Changsha, Hunan. Lansi technology confirmed that the local government helped to enter the village to recruit people.
The current new crown epidemic is spreading globally. Will there be a crisis in some key links of Apple’s global supply chain? According to the analysis of the above-mentioned Shandong supplier executives, in the Apple supply chain, there are two to three suppliers in each link, of which the share of the top two suppliers will reach 80% to 90%, and the share of the third largest supplier is generally in Below 10%, if there is a problem with one supplier in one link, another one or two suppliers should rise to the top; even if there are problems with suppliers in one link, there will be a “safe stock” to help buffer, not in the short term Big problems will arise.
Gartner Research Director Lu Junkuan also told reporters that the impact of the global epidemic on Apple’s supply chain “can be covered. In reality, there can be many control methods to restore (parts) supply and (assembly plant) production to normal.”
Lu Junkuan also mentioned that every link in Apple’s supply chain “still has some inventory”, coupled with the resumption of the supply chain and subsequent intensified work, progress should be able to catch up.
The change in demand is more important. The
current global impact of the new crown epidemic on Apple’s supply chain obviously exists. In this regard, Cook also admitted at the shareholders meeting on February 27 that he is currently facing “challenges.” However, according to the survey, the industry generally believes that China, the “world factory”, is accelerating its recovery from the epidemic situation, and that the impact is controllable from the whole year.
For example, Lu Junkuan said in the interview that the production and supply of the existing iPhone models “I think it’s okay”, “but new products such as the new iPhone S1, which was originally on the market, have not yet been released, and it is not certain when they will be available, so there are On the other hand, Lu Junkuan also said, “(Every year) the new product listing in September may not have an impact, but the supply may be affected and may be out of stock.” The
aforementioned Shandong supplier executives believe that the smart phone industry In other words, the good news is that the off-season is always after the Spring Festival, and the second half is usually the peak season. From this perspective, the impact of the whole year may not be too great.
Li Zhijia, the manager of Anhui Investment Fund, also believes that the Xinguan epidemic “definitely has an impact, but the impact is not fatal at present. Because the existing models are in stock and there are no new products. If the outbreak occurs in September or November, That will have a big impact on Apple. ”
Lu Junkuan also reminded that, compared with parts supply and assembly plant production issues, the global consumer demand for smartphones may require more attention.
“I think the problems of the supply chain are small, and the impact of the epidemic on the global economy is the big problem. Supply chain problems will only affect Apple’s short-term profitability, and if the global economy is affected, it will not be a problem. Lu Junkuan said, “Now it seems that if the epidemic in countries such as Italy and Iran continues, the impact of (the epidemic) on the demand side will no longer be only the Chinese market, but the global effect. In addition, the US epidemic situation will also be affected. The rapid rise will also affect consumer purchases on the demand side. ”
An electronics industry analyst at a domestic securities firm also told reporters,” As long as demand does not disappear, (Apple’s supply chain) can pass Follow-up rush to achieve a certain degree of catch-up. ”
The analyst also said that from the perspective of the Chinese market, the decline in the demand side of smartphones in the first quarter of this year will not be too small, and” if the epidemic in China is controlled at the end of April, Perhaps things will improve a lot in the second quarter. ” From a global perspective, the current industry expectations vary, “Some people think that the 10% adjustment is already very large, while others think that 15% may be a small adjustment.”
In addition, the impact of the epidemic on global capital markets, including the US stock market, is gradually deepening. Data show that since February 20, Apple’s stock price has fallen from US $ 323.62 / share fluctuations to US $ 292.92 / share at the close on March 5, a drop of nearly 10%; Apple’s market value has reached US $ 1.4 trillion from February 19 It fell to $ 1.2 trillion on March 5 and dropped to $ 0.2 trillion.
In response, Gao Guolei, a partner of Zhang He Investment Management and a senior visiting scholar at Columbia University in the United States, said that regarding the decline in Apple’s stock price, “we must first see that the continuous decline in U.S. stocks is currently widespread, not a problem for Apple. This year is the US election year. In history, basically every US election year, there will be relatively large fluctuations in the US stock market. This is because the new president will often have a big difference in style from the previous president. ”
In terms of Apple’s fundamentals, Gao Guolei believes that the factors that can affect the performance of Apple’s market outlook include: First, the uncertainty of the global epidemic and its impact on the supply and demand sides of Apple products; second, Apple services The growth rate of revenue and the proportion of revenue are continuing to rise. If this part can continue to perform well, it is good for Apple. Third, Apple hardware revenue growth has indeed slowed in the past two years, but the total number of users has increased after all. , If the total amount of stagflation is not good for Apple’s market performance.