Foxconn, the largest iPhone manufacturer in China, has its largest plant in Zhengzhou, and it has been the site of turmoil all week. Over the past few days, simmering worker discontent has erupted into rallies, leading to multiple skirmishes between demonstrators and police forces.
Yesterday, Foxconn issued an apology for a “technical error” in remuneration that happened after recruiting a new group of workers who claimed to have been mislead about their financial security. Each protesting new hire was offered approximately $1,400 to resign and leave the building.
Some 20,000 workers reportedly accepted Foxconn’s offer, which may have been too successful. Most of them were fresh workers who hadn’t even started working on the lines yet, and they just pocketed their paychecks and ran. More than 200 thousand people were employed at the plant prior to the disruption.
All of this may have a major adverse effect on iPhone production, and consequently, sales.
Best Buy issued a similar warning about a shortage of high-end iPhones this holiday season on Tuesday, and Apple warned of lower-than-expected shipments of the iPhone 14 Pro and Pro Max on November 7.
If the “present issue” continues through December, some analysts predict that production of the iPhone will be cut by about 10 million units. Some analysts believe there may be 25-30% fewer iPhone 14 Pros available than “usual” this holiday season.
A Foxconn insider, meanwhile, told Reuters that the issue has a significant effect on their public image but very little effect on their capabilities. Since they hadn’t started training or working, the departing employees didn’t impair our present capacity.
Workers became disgruntled since the plant had to operate in “closed loop” mode and new hires had to live in dorms with persons who tested positive for COVID.