Apple Supplier Quanta Faces Worker Unrest in China Under ‘Closed-Loop’ System

Apple supplier Quanta Computer is seeing its “closed-loop” production bubble in Shanghai burst as factory workers grow increasingly agitated with the lockdown restrictions and revolt against management, according to a report from Bloomberg (via Yahoo Finance).

As China started grappling with its largest COVID-19 outbreak in two years starting in March, factories across the country faced shutdowns. China produces more than 90% of all Apple products for the world.

Shanghai, which houses a large chunk of China’s industrial operations, felt the brunt of strict lockdowns to curb the spread of COVID-19. Companies were eventually allowed to start production lines back up under closed-loop systems, where workers both work and live at the factory (or nearby).

Quanta, which produces almost three-quarters of Apple’s MacBooks, has had employees working in closed-loop systems at its China factories for almost two months now.

Frustrated with the conditions and demanding more freedom, hundreds of Quanta’s mostly low-wage workers have clashed with guards and charged into the company’s Taiwanese managers’ dormitories, according to people familiar with the developments.

Employees and management were reportedly locked in an hours-long standoff over the prolonged lockdown and unsatisfactory pay. A large group of workers even rushed past isolation barriers earlier this month to hunt for daily necessities due to fears that their current supplies would run out before the closed-loop system is lifted.

“People are getting frustrated and tired of these controls,” said one of the workers. “That’s inevitable, especially when there is no timeline on when all this will end.”

According to a report from earlier this month, Quanta was only operating at 30% capacity despite employees living on-site. The production deficit has led to MacBook Pro deliveries being heavily delayed.

Quanta isn’t the only company operating under a closed-loop system. In fact, most factories in and around Shanghai have gone into closed loops since late March. That includes Foxconn, which produces the majority of Apple’s iPhones. It is also likely that similar conditions and labour unrest have taken root at other factories as well.

It was previously reported that the development of at least one iPhone 14 model is delayed by three weeks due to the production slowdown in China. Following these events, Apple is also reportedly pushing suppliers to diversify production outside the country.