Foxconn Zhengzhou plant's Nov shipments to fall further -
Worker unhappiness at plant escalated into protests this
Over 20,000 workers, mostly new recruits, have left -
TAIPEI, Nov 25 (Reuters) - Foxconn's flagship
iPhone plant in China is set to see a further reduction in
November shipments after the latest bout of worker unrest this
week, a source with direct knowledge of the matter said on
Friday, as thousands of employees quit.
The world's largest Apple iPhone factory has been
grappling with strict COVID-19 restrictions that have fuelled
discontent among workers and disrupted production ahead of
Christmas and January's Lunar New Year holiday, as many workers
were either put into isolation or fled the plant.
Following Wednesday's escalation that saw workers clash with
security personnel, Foxconn could now see more than 30% of the
site's November production affected, up from an internal
estimate of up to 30% when the labour issues erupted in late
October, the source said.
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 Co,
declined to comment. Apple, which said on Thursday it had staff
at the factory, did not respond to a request for comment on
"The worker unrest at Foxconn's plant in China could weigh
on Apple's November iPhone shipments," Victoria Scholar, head of
investment at Interactive Investor said, as concerns grow over
Apple's ability to deliver products for the busy holiday period.
Apple shares were down 1.9% in late morning trade on Friday,
while the benchmark Nasdaq index was down 0.3%.
"Apple is still viewed as one of the more resilient
stocks in the tech sector... However, Apple continues to hold
off from providing official guidance given the macroeconomic
uncertainty," Scholar added.
U.S. Best Buy Co Inc said on Tuesday it expected
high-end iPhones to be in short supply at stores this holiday
season. Analysts said iPhones at Apple stores in the United
States during the Black Friday shopping season were also down
from a year earlier, and it was taking longer to replenish
stocks, Reuters reported this week.
KGI Securities analyst Christine Wang said if the current
issue lasts through December, around 10 million units of iPhone
production will be lost, which translates to 12% lower iPhone
shipment in the last quarter of 2022.
Wedbush Securities estimates many Apple stores now have 25%
to 30% fewer iPhone 14 Pros than normal heading into the holiday
In a statement on Nov. 7, Apple said it expected lower
iPhone 14 Pro and iPhone 14 Pro Max shipments than previously
Some new recruits hired in recent weeks by Foxconn claimed
they were misled over compensation benefits at the factory, and
others complained about sharing dormitories with colleagues who
had tested positive for COVID.
Foxconn on Thursday apologised for a pay-related "technical
error" when hiring and later offered 10,000 yuan ($1,400) to
protesting new recruits who agreed to resign and leave.
The source said more than 20,000 workers, mostly new hires
not yet working on production lines, took the money and left.
Videos posted on Chinese social media on Friday showed crowds
and long lines of luggage-laden workers queuing for buses.
"It's time to go home," one person posted.
The plant, before its troubles began, employed more than
200,000 staff. It has dormitories, restaurants, basketball
courts and a football pitch across its sprawling roughly 1.4
million-square-metre (15 million-square-foot) facility.
Another Foxconn source familiar with the matter said some
new hires had left the campus but did not elaborate on how many.
This person said that because the people leaving had not yet
been trained or begun to work, their departures would not cause
further harm to current production.
"The incident has a big impact on our public image but
little on our (current) capacity. Our current capacity is not
affected," the source said.
"There's only so much corporate can do on pandemic
prevention ... It's been a problem for a while. This is a
problem faced by everyone," the person said, pointing to other
worker unrest triggered by rigid COVID restrictions, including
upheaval at another Apple supplier, Quanta, in May.
Foxconn shares closed down 0.5%, lagging the broader market,
which ended flat.
($1 = 7.1616 Chinese yuan renminbi)
(Reporting By Yimou Lee; Additional reporting by Brenda Goh and
Johann M Cherian, Tiyashi Datta and Aditya Soni in Bengaluru;
Editing by William Mallard, Gerry Doyle, Elaine Hardcastle)