Foxconn disruptions threaten iPhone shipments

Foxconn disruptions threaten iPhone shipments

Foxconn’s main iPhone factory in China is set to see a further drop in shipments for the month of November.

Foxconn’s main iPhone factory in China will see a further drop in November shipments after the latest wave of worker unrest this week, with thousands of employees quitting, a source familiar with the matter said on Friday.

The world’s largest Apple iPhone factory has been battling tough COVID-19 restrictions that have fueled discontent among workers and disrupted production ahead of the Christmas and Lunar New Year holidays in January, with many workers being quarantined or fleeing the factory.

After Wednesday’s escalation that saw workers clash with security personnel, the source said Foxconn could now see more than 30% of the site’s output affected in November, up from an internal estimate of as high as 30% when labor issues erupted in late October.

The factory is the only one that makes premium iPhone models, including the iPhone 14 Pro, and the source said it is unlikely to resume full production by the end of this month.

Foxconn, formally known as Hon Hai Precision Industry Corporation, declined to comment. Apple, which said Thursday it has employees at the factory, did not respond to a request for comment on Friday.

A worker at Foxconn’s factory was disturbed China Victoria Scholar, chief investment officer at Interactive Investor, said concerns are growing about Apple’s ability to deliver products in the busy holiday period.

Apple shares fell 1.9% in late morning trading on Friday, while the benchmark Nasdaq fell 0.3%.

“Apple continues to be seen as one of the most resilient stocks in the tech sector… apple continues to refrain from providing official guidance given the macroeconomic uncertainty,” Scholar added.

US Best Buy Co. said Tuesday that it expects a shortage of high-end iPhones in stores this holiday season. Analysts said that the iPhones in Apple Stores in United State during the Black Friday Reuters reported this week that the shopping season was also down from a year earlier, and it took longer for stocks to be replenished.

Fewer shipments

KGI Securities analyst Christine Wang said that if the current issue continues through December, about 10 million units of iPhone production will be lost, which translates to a 12% drop in iPhone shipment in the fourth quarter of 2022.

Wedbush Securities estimates that many Apple Stores now have 25% to 30% less iPhone 14 Pros than usual for the holiday shopping season.

In a statement released on November 7, Apple said it expects lower shipments of the iPhone 14 Pro and iPhone 14 Pro Max than previously expected.

Some new recruits have been recruited in recent weeks before Foxconn They claimed they had been misled about compensation benefits at the factory, and others complained about sharing dormitories with colleagues World Health Organization The result of the COVID test was positive.

Foxconn on Thursday apologized for a “technical error” related to wages when hiring and later offered 10,000 yuan ($1,400) to protest new recruits who agreed to quit and leave.

The source said that more than 20,000 workers, most of whom are new employees who have not yet worked on production lines, have taken the money and left. Videos posted on Chinese social media on Friday showed crowds and long lines of workers laden with luggage lining up to wait for buses.

One wrote: “It’s time to go home.”

The plant employed, before its troubles began, more than 200,000 employees. It has dormitories, restaurants, basketball courts, and a soccer field across its sprawling facility of approximately 1.4 million square meters (15 million square feet).

Another Foxconn source familiar with the matter said some new employees had left campus, but did not say how many. This person said that since the people leaving had not yet been trained or started, their departure would not cause further damage to the current production.

“The accident has a big impact on our public image, but it has little impact on our (current) capacity. Our current capacity has not been affected,” the source said.

This person said, referring to other worker disruptions caused by strict COVID restrictions, including disruptions at another Apple supplier, Quanta, in May.

Foxconn shares closed down 0.5%, trailing the broader market, which closed flat.

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