Foxconn’s (2317.TW) 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 (AAPL.O) 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.
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.
“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.
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 shopping season.
In a statement on Nov. 7, Apple said it expected lower iPhone 14 Pro and iPhone 14 Pro Max shipments than previously anticipated.
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.
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