Impact of Foxconn Factory Riot, iPhone Stock Will Be Scarce
The impact of the riots due to the Covid-19 pandemic regional restriction regulations that occurred at the Foxconn factory has had an impact on iPhone production. Reportedly, iPhone shipments will decrease.
Workers’ displeasure has increased in recent days over the lockdown measures, which have sparked clashes with security forces.
In response to this incident, Foxconn apologized for a “technical error” in paying new recruits, which it claims created confusion regarding employees’ compensation benefits.
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The demonstration at the Foxconn factory was finally suppressed after the offer of compensation money. But a new problem then emerged, because more than 20 thousand employees left the iPhone assembly factory in China after taking compensation money.
For information, before the riots, it was recorded that there were more than 200 thousand employees working at the factory, and producing around 70% of the total iPhone in the world.
Even before the riots, it was reported that Foxconn had experienced difficulties in meeting the supply of iPhones. After this problem, it is estimated that more than 30% of iPhone production from the factory will be affected. Even Foxconn still can’t reach its production target until the end of November.
The impact of the Foxconn factory riots has seen iPhone shipments decline even further. On November 7, Apple said it was expecting lower shipments of the iPhone 14 Pro and Pro Max than previously estimated.
Even the impact of the scarcity of the iPhone has begun to be felt. According to reports last Tuesday, high-end iPhones experienced a shortage of supply in stores during the holiday season. A number of analysts also predict the scarcity of this iPhone will continue.
KGI Securities analyst Christine Wang said if the issue persists into December, then around 10 million iPhone production units will be lost, meaning iPhone shipments will be lower by around 12 percent in the last quarter of 2022.
While Wedbush Securities estimates many Apple stores now have around 25 percent to 30 percent fewer iPhone 14 Pros than usual ahead of the Christmas holiday shopping season.
In a statement on November 7, Apple also forecast lower-than-expected shipments of the iPhone 14 Pro and iPhone 14 Pro Max.
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Even so, there is a source from Foxconn providing information to Reuter that the company claims is not affected internally, because the workers who quit have not been trained and started work, but have a big impact on the company’s public image.
“The incident had a major impact on our public image but little on our capacity. Our current capacity is unaffected,” because the actual employees who left have not been trained or started work,” said a Foxconn source. [FY/HBS]
