Foxconn unrest threatens bigger hit to iPhone shipments

Videos posted on Chinese social media on Friday showed crowds and long lines of luggage-laden workers queuing for buses. Photo: VCG/Getty Images

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 has said, 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 which 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.

"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 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," Ms Scholar added.

US retailer Best Buy said earlier this week it expected high-end iPhones to be in short supply at stores during the key US holidays. Analysts said iPhones at Apple stores in the US 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. 

Some new recruits hired in recent weeks by Foxconn claimed they were misled about compensation benefits at the factory, and others complained about sharing dormitories with colleagues who had tested positive for Covid.

Foxconn on Thursday had 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.

Foxconn declined to comment. Apple, which said on Thursday it had staff at the factory, did not respond to a request for comment on Friday. 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 facility. 

Reuters