Tim Cook's visit shines light on new iPhone production base

October 24, 2014 13:00
A file photo shows Apple chief Tim Cook at a Foxconn plant in Xinzheng. Photo: Bloomberg

It's fairly common knowledge that Taiwanese contract manufacturing giant Foxconn has been making most of Apple's hit products over the years at its factories in China. But few know that most of the iPhones are now being churned out at a remote plant in Xinzheng in the central Henan province.

Following labor problems at factories in the Chinese coastal cities, particularly Shenzhen, Foxconn has shifted most of its iPhone production capacity to Xinzheng, a dusty suburb of Zhengzhou, the provincial capital.

The plant, located in the Foxconn Zhengzhou Technology Park, is now said to be the world's largest smartphone production base, with 95 production lines and employing about 120,000 people. The facility will soon ship its 120 millionth iPhone.

Underlining the importance of the new manufacturing base, Apple's CEO Tim Cook paid a visit to the facility this Wednesday, flying in on a small chartered jet from Beijing on his fifth trip to China since he took over the reins of Apple.

Local media reported that after he landed at the Zhengzhou Xinzheng Airport, Cook travelled in a Toyota Coaster van to the Foxconn plant with little fanfare, not even a welcome ceremony.

The A8 chip used in Apple's new phones is made by Taiwan Semiconductor Manufacturing Co. (TSMC), while the displays come from LG, Sharp and Japan Display, and batteries from a firm in Guangdong. The components are all assembled and packaged at the Xinzheng plant.

As he visited the plant, heavy smog didn't appear to bother Cook at all. After he changed to a white work suit and went through security checks, Cook entered a nondescript factory building where the iPhone 6 and iPhone 6 Plus are assembled. He sat beside a young female worker and talked to her for five minutes. He even placed a newly-assembled gold iPhone 6 into its carton and wrapped the box with cellophane film for delivery to the US market.

The 16-gigabyte iPhone 6 carries a price tag of 5,288 yuan (US$865) in China and the iPhone 6 Plus starts from 6,088 yuan, equivalent to almost one fourth of the annual salary of the young lads and gals who make them.

When Cook and other Apple executives took a walk inside the plant and discovered that many workers there, mostly migrant labor in their twenties or thirties, use iPhone knockoffs, we can only imagine how they must have felt.

It was reported that Foxconn chairman Terry Gou as well as a number of local and provincial officials, including a Henan vice governor, accompanied Cook throughout his three-hour site visit and bid farewell to him on the runway when Cook boarded his plane back to Beijing.

The 6.5 million-square-meter Xinzheng plant has been at the center of the US tech giant’s operation with production lines running around the clock since last month when Apple unveiled two new iPhone models.

Within just a week since the official debut, snapshots on Weibo described 93 tons of cargo, believed to be the new phones, being loaded onto China Southern Air's Chicago-bound planes at Xinzheng Airport. The two new models weigh 150 grams on average, so the tonnage can be translated into a total of 600,000 new iPhones.

After the new phones hit the Chinese market last week, Cook will want to ensure that production be further beefed up to meet the buoyant demand -- the number of first-day pre-orders exceeded 10 million units. Cook also wants to make certain that workers and production lines are properly rearranged to make more popular, phablet-sized iPhone 6 Plus which sports a 5.5-inch display.

Previously, ratio of assembly lines for the two models was said to be 7:3, but now Apple wants it to be 5.5:4.5, meaning the plant has to overcome challenges like a relatively high defect rate and insufficient display panel supply.

Both models are out of stock on Apple's online store in China. The lucky fans who got their orders confirmed still need to wait for three to four weeks before they can get hands on their dream gadgets. The upcoming Christmas and New Year shopping season is also adding pressure to Apple’s supply chain and production management.

Cook has met some senior Chinese officials, including vice premier Ma Kai, and also visited the headquarters of the three national telecom carriers, but judging from his itinerary, production is apparently his top agenda as policy and regulatory hurdles that resulted in new iPhones’ late arrival in China had already been resolved before his trip.

He will also fly to Changshu, a county in eastern Jiangsu province and home to a plant that is rumored to be the solo manufacturer of the Apple Watch.

Taiwan OEM firm Quanta's production base there will start making the smartwatch in January 2015 as the product is scheduled to hit the market in February. According to leaked information, Apple has signed an exclusive deal with Quanta and banned it from making anything for competitors.

Quanta has been recruiting additional workers since September to increase its staff headcount to 40,000 with a promised monthly wage of no less than 3,500 yuan, China Business News notes.

Apple Watch means a lot to Cook as it is the firm's first new product line since he succeeded Steve Jobs as Apple's boss in 2011. Credit Suisse estimates 37.5 million Apple Watches can be made by Quanta in 2015 while Taiwan's Institute for Information Industry, a think tank under the Taiwan government, notes in a report that for every five new iPhones to be sold next year, at least one Apple Watch will be bought as well.

Apple Watch's late release suggests some unsolved production problems. It is said that Apple still has one month to further optimize the product configuration. Thus, Cook's visit to the Changshu plant is certainly vital in the run-up to the scheduled launch.

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Tim Cook writes on Twitter about his visit to Foxconn's Xinzheng plant, describing his talks with a female worker there as an early highlight of his China trip. Photo: Twitter
Cook is seen at the Foxconn plant in Xinzheng, in central China's Henan province, Oct. 22. Photo: Henan government
During his latest China visit, Cook met Vice Premier Ma Kai, who oversees the country's IT sector. Photo: Xinhua
A local official sees Cook off on the runway before he boards a chartered jet back to Beijing. Photo: Henan government

EJ Insight writer