Foxconn unrest raises iPhone supply risks, weighs on Apple shares

Foxconn unrest raises iPhone supply risks, weighs on Apple shares
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  • Foxconn’s Zhengzhou factory November deliveries to drop further – source
  • Workers’ unhappiness at the plant turned into protests this week
  • More than 20,000 workers, mostly new hires, have left – source

TAIPEI, Nov 25 (Reuters) – Foxconn’s (2317.TW) The flagship iPhone factory in China is set to see a further drop in November shipments after recent labor unrest this week saw thousands of workers out of a job.

The largest Apple company in the world (AAPL.O) The iPhone factory is grappling with strict COVID-19 restrictions that have fueled discontent among workers and halted production in the run-up to Christmas and the January New Year holiday, as many workers have either been isolated or fled the plant.

We saw after the escalation on Wednesday workers clashed with security personnelFoxconn could now see more than 30% of the site’s November production affected, up from 30% when labor issues arose in late October, according to internal estimates.

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

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

“Labor unrest at Foxconn’s China plant could affect Apple’s November iPhone shipments,” said Victoria Scholar, chief investment officer at Interactive Investor, as concerns grew over Apple’s ability to deliver products for the busy holiday season.

Apple shares fell 1.9% and the Nasdaq fell 0.3% in morning trading on Friday.

“Apple is still regarded as one of the more resilient stocks in the tech sector…However, Apple continues to refrain from providing official guidance given the macroeconomic uncertainty,” Scholar added.

US Best Buy Co Inc (BBY.N) He said it would be high on Tuesday There will be fewer iPhones in stores this holiday season. Analysts said iPhones in U.S. Apple stores during the Black Friday shopping season were also lower than a year earlier, and inventory was taking longer to replenish, Reuters reported this week.

This week, hundreds of workers joined protests at Foxconn’s main iPhone factory in Zhengzhou, China, with some men smashing surveillance cameras and windows, footage uploaded to social media showed.


Christine Wang, an analyst at KGI Securities, said that if the current rollout continues through December, about 10 million iPhones will be lost, representing a 12% drop in iPhone shipments in the last quarter of 2022.

Wedbush Securities estimates that many Apple stores now have 25-30% fewer iPhone 14 Pros than usual heading into the holiday shopping season.

In a statement in November. On the 7th, Apple said it expects lower iPhone 14 Pro and iPhone 14 Pro Max shipments than previously expected.

Some new employees hired by Foxconn in recent weeks have claimed they were cheated of compensation benefits at the factory, while others have complained of sharing dormitories with co-workers who have tested positive for COVID.

Foxconn on Thursday apologized for a “technical error” in hiring and later offered 10,000 yuan ($1,400) in protest to new hires who agreed to resign and leave.

The source said more than 20,000 workers, mostly new workers who had not yet worked on the 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.

“Time to go home,” one person wrote.

Before the problems began, the plant employed more than 200,000 workers. The nearly 1.4 million square meter (15 million square foot) sprawling facility features dormitories, restaurants, basketball courts, and a soccer field.

Another Foxconn source familiar with the matter said some new hires have left the campus, but did not provide a number. The person says that because those who are leaving have not yet been trained or started, their departure will not cause further damage to current production.

“The incident has a major impact on our public image, but has little impact on our (current) capabilities. Our current capabilities are not affected,” the source said.

“There’s a lot that corporates can do to contain the pandemic … It’s been a problem for a while. It’s a problem that everybody’s facing,” the person said, pointing to other labor unrest caused by strict COVID restrictions, including upheavals elsewhere. . Apple supplier, Quanta (2382.TW)in may

Foxconn shares fell 0.5%, underperforming the broader market. (.TWII) straight finisher.

($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; Edited by William Mallard, Gerry Doyle, Elaine Hardcastle

Our standards: Thomson Reuters Trust Principles.

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