Nov. shipments at the Foxconn Zhengzhou facility would decline even more, according to the source.
Following the most recent round of employee discontent this week, Foxconn’s (2317. TW) flagship iPhone production in China is expected to witness a significant decrease in November shipments, according to a person with firsthand knowledge of the situation on Friday. This comes as thousands of workers leave the facility.
As a result of the COVID-19 regulations, production at the world’s largest Apple (AAPL.O) iPhone factory has been disrupted in advance of Christmas and the Lunar New Year holiday in January. Many workers were put in isolation or left the facility, which has made other workers unhappy.
Related:Â More workers are leaving the massive China iPhone manufacturing industry because of Foxconn’s problems, according to a source.
Foxconn might potentially see more than 30% of the facility’s November production disrupted with Wednesday’s escalation, up from an internal estimate of up to 30% when the labor concerns first surfaced in late October, the source added.
According to the insider, it is unlikely that complete production would restart by the end of this month, as the plant is the only one that produces luxury iPhone models, including the iPhone 14 Pro.
Hon Hai Precision Industry Co., formerly known as Foxconn, declined to comment. Despite having employees at the site, Apple claimed on Thursday that a request for comment on Friday went unanswered.
As worries about Apple’s capacity to meet the demand for the busy holiday season rise, Victoria Scholar, head of investment at Interactive Investor, warned that “labor unrest at Foxconn’s plant in China could weigh on Apple’s November iPhone shipments.”
In late morning trade on Friday, Apple shares were down 1.9%, while the leading Nasdaq index was down 0.3%.
“One of the tech sector’s more resilient stocks is still thought to be Apple.” Apple, meanwhile, continues to refrain from offering formal counsel in light of the macroeconomic unpredictability. Added by a scholar
According to Best Buy Co Inc (BBY.N) in the United States, high-end iPhones are expected to be in short supply this holiday season. Reuters last week stated that analysts said that sales of iPhones at Apple outlets in the United States during the Black Friday shopping season were also down from a year ago and that it was taking longer to restock stockpiles.
Reduced shipments
Christine Wang, an analyst at KGI Securities, says that if the current problem lasts until December, about 10 million iPhone production units will be lost. This will cause iPhone shipments to drop by 12% in the last quarter of 2022.
Wedbush Securities thinks that many Apple stores will have 25% to 30% fewer iPhone 14 Pros than usual during the holiday shopping season.
Apple said it expected fewer shipments of the iPhone 14 Pro and iPhone 14 Pro Max than it had previously predicted in a statement on Nov. 7.
Foxconn recently hired new employees, and some of them grumbled that they had been misled about the factory’s pay and benefits, while others griped about living in dorms with coworkers who had tested positive for COVID.
Related: Foxconn, an Apple supplier, apologises for a recruiting error at a COVID-affected China plant.
Foxconn offered to protest new hires who agreed to resign and leave 10,000 yuan ($1,400) as compensation on Thursday after apologizing for a “technical error” involving pay when hiring.
More than 20,000 employees, many of whom were recent hires who weren’t yet working on production lines, allegedly grabbed the money and went. Videos shared on Chinese social media on Friday showed throngs and extended lines of workers waiting for buses while carrying a lot of stuff.
One user wrote on social media, “Time to go home.”
Before its problems started, the facility employed more than 200,000 people. On its huge 1.4 million square foot (15 million square meters) property, there are dorms, restaurants, basketball courts, and a football field.
Although they did not specify how many new hires had departed the site, another Foxconn source with knowledge of the situation claimed that some had. According to this person, the production would not be further harmed by the people departing because they had not yet received training or started working.
“The issue significantly affects our reputation but not our present capacity.” Our capability as it is now is unaffected, as explained by the source.
“There is only so much that corporations can do to avert pandemics.” It has long been an issue. “Everyone struggles with this issue,” the person stated, citing other instances of employee unrest brought on by strict COVID requirements, such as unrest at another Apple supplier, Quanta (2382. TW), in May.
In contrast to the broader market (.TWII), which ended flat, Foxconn shares closed down 0.5%.
