Further Decline in iPhone November Shipments at Foxconn Plant in China

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Following the most recent round of employee unrest this week, Foxconn's flagship iPhone plant in China is expected to see a further decrease in November shipments, according to a source with direct knowledge of the situation on Friday. This comes as thousands of workers leave the plant.

The strict COVID-19 regulations that have plagued the largest Apple iPhone factory in the world have fueled employee unrest, disrupted production in time for the Christmas and Lunar New Year holidays, and forced many employees to leave the facility.

Foxconn might now see more than 30% of the facility's November output disrupted, up from an internal estimate of up to 30% when the labour troubles first flared up in late October, the source added. This is an increase from the internal estimate of up to 30%.

According to the insider, it is doubtful 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, the previous name of Foxconn, declined to comment. Despite having employees at the factory, Apple claimed on Thursday, a request for comment on Friday went unanswered.

As worries about Apple's capacity to meet demand for the busy holiday season rise, Victoria Scholar, head of investing at Interactive Investor, warned that "labour unrest at Foxconn's facility in China might weigh on Apple's November iPhone shipments."

The benchmark Nasdaq index fell 0.3 percent while Apple shares fell 1.9 percent in late morning session on Friday.

"One of the tech sector's more robust equities is still thought to be Apple. Apple, meanwhile, continues to refrain from offering formal counsel in light of the macroeconomic unpredictability "Scholar tacked on

"US Best Buy stated on Tuesday that it anticipated having a shortage of high-end iPhones in its stores 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

According to Christine Wang, an analyst at KGI Securities, if the current problem persists through December, approximately 10 million iPhone production units will be lost, resulting in a 12 percent decrease in iPhone shipments in the final quarter of 2022.

As we approach the holiday buying season, Wedbush Securities predicts that many Apple outlets currently have 25 to 30 percent less iPhone 14 Pros than usual.

Apple stated it expects less shipments of the iPhone 14 Pro and iPhone 14 Pro Max than it had originally predicted in a statement on November 7.

Foxconn recently hired new employees, and some of them complained 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.

Foxconn apologised for a "technical issue" regarding salary while recruiting on Thursday and afterwards provided CNY 10,000 (about Rs. 1,14,000) to disgruntled new hires who decided to resign and depart in exchange for their cooperation.

More than 20,000 employees, many of them were recent hires who weren't yet working on manufacturing lines, allegedly grabbed the money and went. Videos shared on Chinese social media on Friday showed crowds and extended lines of workers waiting for buses while carrying a lot of luggage.

One user said on social media, "Time to go home."

Before its problems started, the plant employed over 200,000 people. On its sprawling 1.4 million square foot (15 million square meter) property, there are dorms, restaurants, basketball courts, and a football field.

Although they did not specify how many new recruits 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) capabilities. Our capability as it is now is unaffected "explained the source.

"Corporate efforts to avoid pandemics are limited. It has long been an issue. Everyone struggles with this issue, "The speaker cited other instances of employee unrest brought on by strict COVID regulations, such as unrest at Quanta, another Apple supplier, in May.

In contrast to the market as a whole, which finished flat, Foxconn shares ended the day down 0.5 percent.

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