Thousands of employees quit biggest iPhone making factory impacting shipments

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The main iPhone factory, owned by China’s biggest iPhone maker Foxconn, is located in Zhengzhou and has been the scene of unrest this week. Latent worker unhappiness escalated into protests in the last few days and there were several clashes with security personnel.

Finally, Foxconn apologized yesterday for a pay-related “technical error” that occurred after hiring the latest batch of recruits who claimed to have been misled about compensation benefits. The company offered each protesting new recruit CNY 10,000 (about $1,400) to resign and leave the premises.

And it turns out that the offer may have been a bit too successful, as reports are coming in that over 20,000 workers took Foxconn up on it. They were mostly new hires not yet working on production lines, took the money and left. Before the problems began, more than 200,000 employees worked at the factory.

Thousands of workers stop major iPhone factory, affecting shipments

All of this has the potential to seriously negatively impact iPhone production and therefore shipments. On Nov. 7, Apple already said it expected lower-than-expected iPhone 14 Pro and Pro Max shipments, and Best Buy warned Tuesday that high-end iPhones are in short supply in stores this holiday season.

Some analysts estimate that if the “current problem” lasts until December, about 10 million fewer iPhones will be made than originally planned. Others estimate there will be 25% to 30% fewer iPhone 14 Pros than “normal” heading into the holiday shopping season.

On the other hand, a source inside Foxconn told Reuters that “the incident has a big impact on our public image, but little on our capacity. Our current capacity is not affected”, as the people who left had not yet been trained or started work.

The labor unrest was sparked in part by strict COVID restrictions that forced the facility to operate in ‘closed circuit’ mode and to house new recruits in dormitories shared with COVID-positive people.

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