- The iPhone manufacturer Foxconn has laid off 50,000 seasonal workers since October at its factory in China, according to a new report.
- Though the jobs were filled by temporary employees Foxconn hires under contract each year, the cuts were made much earlier than usual, sources told the Nikkei Asian Review.
- The cutbacks follow news Apple would reduce its iPhone production by about 10% in response to slowing sales.
- Apple‘s production slowdown has also led to employee cuts at other companies in the iPhone supply chain.
Tens of thousands of seasonal workers in the iPhone supply chain have reportedly been let go earlier than usual amid Apple’s production cuts.
Since the start of the holiday quarter, which began in October, about 50,000 temporary employees have been cut at the Chinese factory for Foxconn, Apple’s largest iPhone manufacturer, the Nikkei Asian Review reports. A massive number of workers are employed temporarily for the holiday season each year to help scale up production, but sources told Nikkei that these jobs were being cut significantly earlier than in previous years.
Apple is thought to have told suppliers earlier this year to cut back iPhone production by an estimated 10%, and companies involved in the iPhone supply chain appear to be responding in kind. Nikkei reports that Apple’s second-biggest manufacturer, Pegatron, also reduced its number of temporary workers by tens of thousands. Sources told Nikkei that other companies had given employees “extended vacations” to avoid laying them off.
Even Apple is reportedly cutting back on its hiring for certain divisions because of lower iPhone demand.
Reports indicate that Apple has asked suppliers to cut production of iPhones at least twice in the past few months. In addition to January’s report of cutbacks, The Wall Street Journal reported in November that Apple had scaled back production of its three newest iPhone models: the iPhone XR, the iPhone XS, and iPhone XS Max.
Apple shocked the market earlier this month when it announced its revenue from iPhone sales for its first fiscal quarter of 2019 – which includes 2018’s holiday season – would be “significantly lower than it expected.” The company’s latest estimates for revenue were revised down to about $US84 billion, which was 7.6% lower than investors previously expected. The financial analyst Daniel Ives called it “Apple’s darkest day in the iPhone era.”
Apple cited numerous reasons for the revenue decrease, including the company’s popular $US29 battery-replacement program.
Additionally, Apple attributed issues to “supply constraints” and “economic weakness in emerging markets, especially China.” In November, when news first emerged iPhone demand was slowing, Foxconn said it was slashing almost $US3 billion in expenses ahead of a “very difficult and competitive year.”
A contentious trade war between US and China has also loomed over iPhone production for Foxconn, which has 12 factories in China. Reuters reported in December that Foxconn would be shifting more of its iPhone production to its factories in India, where Foxconn is investing $US356 million in an expanded manufacturing plant.
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