There were aggressive workers at the world’s largest iPhone factory this week. And it put Apple in another dilemma with supply challenges.
Additionally, it highlights how the country’s rigid zero-Covid protocol is hurting global tech companies.
The problem started last month when workers left the factory campus in Zhengzhou citing COVID concerns. The city is the provincial capital of central Henan. The company was understaffed and was offering reinstatement bonuses to its employees.
But protests began this week when newly hired workers said management broke promises. In the end, the company gave employees cash so they could leave when they ran into security personnel.
Analysts said the issuance by Taiwanese manufacturer Foxconn would speed up the company’s diversification from China to countries like India, which is also a major supplier to Apple.
What Experts Say
The managing director of Wedbush Securities said in an interview with CNN Business that the ongoing production shutdown at Foxconn’s troubled Zhengzhou campus has become an “albatross” for Apple.
“Every week of this shutdown and unrest, we estimate is costing Apple roughly $1 billion a week in lost iPhone sales. Now roughly 5% of iPhone 14 sales are likely off the table due to these brutal shutdowns in China,” he stated.
The supply didn’t suffice the iPhone 14 demand throughout the Black Friday holiday weekend. According to Ives, it could result in colossal scarcity all the way to Christmas. Furthermore, the distractions at Foxconn became a huge “gut punch” to Apple this quarter.
Ives said in a note on Friday that Black Friday stores find huge iPhone scarcity across the board.
“Based on our analysis, we believe iPhone 14 Pro shortages have gotten much worse over the last week with very low inventories,” he said. “We believe many Apple Stores now have iPhone 14 Pro shortages of up to 25 – 30% below normal heading into a typical December.”
TF International Securities analyst Ming-Chi Kuo tweeted that over 10% of worldwide iPhone manufacturing capacity experienced an aftereffect of the Zhengzhou campus disruptions.
Foxconn Staff Shortage
Earlier this month, Apple announced that its latest iPhone series would be “temporarily” affected by China’s COVID guidelines.
Moreover, it stated that its Zhengzhou assembly facility was “currently operating at significantly reduced capacity” because of the COVID setbacks. Typically, the factory holds about 200,000 employees.
Since mid-October, the Zhengzhou campus underwent difficulty with a COVID outbreak that led to panic among its staff.
In November, clips of workers leaving Zhengzhou on foot circulated on Chinese social media. The circumstances compelled Foxconn to intensify its move to get back its employees.
The firm stated that it had swelled its daily bonuses four times to attract back its employees. A week previously, according to state media, Foxconn recruited 100,000 individuals.
However, on Tuesday evening, several employees, especially newly hired ones, started to revolt against the payment terms given to them.
On Wednesday evening, the people quieted down. Protesters returned to their dormitories inside the company’s campus following Foxconn’s offer to compensate the new workers 10,000 yuan ($1400).
The new compensation covers the standard two months’ wages.
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