Apple's China supply chain bet: one COVID lockdown stopped iPhone production

For more than a decade, Apple concentrated the assembly of its flagship product — the iPhone — in one country: China. The physical centre of this strategy was Foxconn's Zhengzhou Technology Park, a campus of 200,000 workers that produced the bulk of the world's iPhones and was nicknamed 'iPhone City'. Apple's logic was impeccable on paper: China offered skilled labour, mature supply chains, and the scale needed to assemble millions of devices per week. But the logic had one weakness: it was all in one country subject to one government's policies.

That weakness became a crisis in 2022. In March, China's zero-COVID policy locked down Shenzhen, shutting Foxconn's operations there. By October, a COVID outbreak at the Zhengzhou plant triggered a lockdown. Workers trapped inside protested over unpaid wages, harsh restrictions, and broken bonuses. Thousands fled on foot, walking across fields. On November 23, protests turned violent as workers clashed with police. The result: weeks of severe iPhone 14 Pro and Pro Max shortages, with shipping estimates stretching into December and January.

The crisis forced Apple's hand on a strategy it had been exploring cautiously: moving production out of China. In 2022, Apple began producing the iPhone 14 in India at Foxconn's Tamil Nadu plant. By 2023, India was assembling iPhones within weeks of the China launch for the first time. Apple announced a target of shifting 25% of iPhone production to India by 2025. Foxconn invested $1.54 billion in Indian manufacturing facilities in November 2023. The concentration that had served Apple for a decade was unwinding, accelerated by a single COVID lockdown in a single Chinese city.