China Floods – Apple Slowdown?
Zhengzhou is the capital of Henan Province and has a population of ~10m, over twice the population of LA, and receives an average of over 11” of rain during July and August, so the population is used to a bit of flooding now and then. That said, a few extra days of rain have led to devastating flash floods that caused 12 deaths and led to over 500 people being trapped in subway tunnels in and around the city after flood defenses were overwhelmed and water filled the tunnels. 24” of rain fell on Tuesday, with almost 8” in one hour, causing roads to close, airport traffic to end, and more permanent damage to roads in some areas.
Foxconn (2354.TT) has three factories in Zhengzhou, and while the company insists that there is no flooding in those locations, they do admit that some of the areas surrounding the factories have become impassable and emergency measures have been taken to maintain the safety of employees. That said, the three factories account for roughly half of the assembly of iPhones, and while the factories themselves remain in operation, the ability to move materials and goods in and out of the plants is quite limited according to local press, increasing fears that there could be some delays in the iPhone 13 announcement or availability. Some flights have been able to leave the Zhengzhou airport but most have been cancelled and some feeder roads have been damaged, but given the fact that it is still a bit early in the iPhone build cycle, unless the rain continues for many days, we expect the Apple iPhone release schedule will remain intact.
Foxconn (2354.TT) has three factories in Zhengzhou, and while the company insists that there is no flooding in those locations, they do admit that some of the areas surrounding the factories have become impassable and emergency measures have been taken to maintain the safety of employees. That said, the three factories account for roughly half of the assembly of iPhones, and while the factories themselves remain in operation, the ability to move materials and goods in and out of the plants is quite limited according to local press, increasing fears that there could be some delays in the iPhone 13 announcement or availability. Some flights have been able to leave the Zhengzhou airport but most have been cancelled and some feeder roads have been damaged, but given the fact that it is still a bit early in the iPhone build cycle, unless the rain continues for many days, we expect the Apple iPhone release schedule will remain intact.
Zhengzhou Flooding - Source: BBC
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