Foxconn’s flagship iPhone factory in China is expected to see a further reduction in November shipments after the latest bout of labor unrest this week, a source with direct knowledge of the matter said on Friday, as thousands of employees resigned.
Apple’s largest iPhone factory in the world is grappling with tough COVID-19 restrictions that have fueled worker discontent and disrupted production ahead of January’s Christmas and Lunar New Year holidays, as many workers were isolated or fled the plant.
Following Wednesday’s escalation which saw workers clash with security personnel, Foxconn could now see more than 30% of the site’s production in November affected, compared to an internal estimate of up to 30% when the Labor issues erupted in late October, the source said.
The factory is the only one making high-end iPhone models, including the iPhone 14 Pro, and the source said it’s unlikely to resume full production by the end of this month.
“Worker unrest at Foxconn’s factory in China could weigh on Apple’s iPhone shipments in November,” said Victoria Scholar, chief investment officer at Interactive Investor, as concerns mount over the ability of ‘Apple to deliver products for the busy holiday period.
Apple shares fell 2.2% at the start of Friday’s session, while the benchmark Nasdaq index was flat.
“Apple is still considered one of the most resilient stocks in the technology sector…However, Apple continues to refrain from providing official guidance given the macroeconomic uncertainty,” Scholar added.
Best Buy said Tuesday it expects high-end iPhones to be in short supply in 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 inventory, reported Reuters this week.
Some new recruits hired by Foxconn in recent weeks have claimed they were misled about factory pay, and others have complained about sharing dormitories with co-workers who tested positive for COVID.
Foxconn apologized on Thursday for a “technical error” over hiring pay and later offered 10,000 yuan ($1,400) to protesting new hires who agreed to quit and leave.
The source said more than 20,000 workers, mostly new recruits who were not yet working on the production lines, took the money and left. Videos posted Friday on Chinese social media showed crowds and long lines of luggage-laden workers queuing for buses.
“It’s time to go home,” one person said.
Foxconn, officially known as Hon Hai Precision Industry, declined to comment. Apple, which said Thursday it has staff at the factory, did not respond to a request for comment on Friday.
The factory, before its difficulties began, employed more than 200,000 people. 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 recruits had left campus but did not specify how many. This person said that because the people leaving had not yet been trained or started working, their departures would not cause further damage to current production.
“The incident has a large impact on our public image but little on our (current) capacity. Our current capacity is not affected,” the source said.
“Companies can’t do much about pandemic prevention… It’s been a problem for some time. This is a problem everyone is dealing with,” the person said, pointing to other worker unrest sparked by rigid COVID restrictions, including upheaval at another Apple supplier, Quanta, in May.