Chinese iPhone factories cut workers as demand dips
Some of the biggest factories supplying Apple are reducing staff and cutting overtime
Chinese factories that supply Apple have slowed production and reduced staff as the coronavirus pandemic dents global demand for smartphones and other gadgets. Foxconn, the contract manufacturer, has paused hiring at its huge factory complex in Zhengzhou, Henan province, which assembles iPhones, according to several workers. They said that the plant, which employs hundreds of thousands of workers and is nicknamed “iPhone City”, has also begun to cut some of the temporary workers it hired in large numbers in February as it ramped up production after a long pause. Overtime hours, a staple of factory work that boosts salaries, has been curtailed as well, the workers said, and notices seen by the Financial Times encouraged workers to take holidays. “We heard the outbreak is very serious in the US. It’s had a big impact on us,” said a worker surnamed Li, who assembles the iPhone 11 model at the plant. Mr Li said he expected a week-long break over the May 1 labour day holiday. Last year he was given one day off. “We have not worked overtime since April 10,” said another worker surnamed Wang, also on the Apple production line. Mr Wang said temporary workers at the factory were dismissed last week.
Apple closed all of its stores outside of Greater China in March and has only recently started to reopen some of its retail outlets beginning with South Korea last week. “The hit to offline retail goes without saying. Apple only managed to reopen its first store outside of China on April 18,” said Jia Mo, analyst at market research company Canalys. TrendForce, a technology industry research company, said it had cut its forecast for Apple smartphone production this year from 200m units to 180m units because of the pandemic. “The global economy has taken a nosedive, which may induce iPhone users to postpone their phone replacement cycles,” said Mia Huang, an analyst at Trendforce. Goldman Sachs analysts expect iPhone shipments to fall 36 per cent this quarter. Taiwan’s Pegatron, another large Apple contract manufacturer, also appears to be cutting workers at its Shanghai factory as demand falls. “About a thousand temporary and third-party dispatched workers were fired,” said one employee at the plant, who asked to remain anonymous. “The US orders are not coming, so why would we keep all the workers,” he added. Pegatron has also encouraged temporary workers to leave voluntarily. “Temporary workers normally drift around between big factories but now they have nowhere to go,” said Li Chao, a third-party recruiter for Foxconn and Pegatron. “Workers are being laid off across the country.” “The only places that are hiring are face mask factories but they are usually small scale and fill up fast,” said Mr Li. Apple and Foxconn declined to comment. Pegatron did not immediately respond to a request for comment.