Apple assembler Foxconn cuts 50,000 seasonal workers ahead of schedule

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in iPhone
Apparently impacted by Apple's iPhone demand, some 50,000 seasonal workers have been dismissed from Foxconn since October, a report indicated on Friday.

Foxconn entrance


What's unusual isn't the size of the cuts but the timing, Nikkei sources noted. Contracts would normally be renewed every month between August and mid- to late January, so dismissals before the end of the year are "quite different," one source said.

Similar layoffs are happening at other companies in the iPhone supply chain, such as at fellow assembler Pegatron, which began terminating monthly contracts in November. A source close to Pegatron said that standard practice is to scale a 200,000-strong workforce back by tens of thousands each month until hitting a 100,000 minimum, but in 2018, the process began sooner.

A Shenzhen-based parts supplier is even said to have asked 4,000 workers to take a "vacation" between October and March, at which point it will decide whether or not to begin layoffs.

Foxconn's cost-cutting efforts are said to be going a step further, with restructuring merging the division responsible for MacBooks and iPads with a unit building Dell and Acer PCs.

"Previously, each business unit had its own supporting staff, and by merging business divisions, Foxconn can slash some 50 percent of those supporting jobs and even condense managerial positions too," one source said.

Apple recently warned about a $5 billion revenue shortfall for the December quarter, something it linked directly to poor Chinese iPhone sales. It put lesser blame on other markets, as well as factors like "foreign exchange headwinds," fewer carrier subsidies, and discounted battery replacements, which were 11 times more than the company had counted on.

Some critics have pointed the finger squarely at Apple's pricing strategy. While the company has enjoyed high profit margins by targeting the "premium" market, Chinese brands like Huawei and Xiaomi now have quality phones that sell for much less than Apple's.

Comments

  • Reply 1 of 7
    Apparently impacted by Apple's iPhone demand, some 50,000 seasonal workers have been dismissed from Foxconn since October, a report indicated on Friday.

    Foxconn entrance


    What's unusual isn't the size of the cuts but the timing, Nikkei sources noted. Contracts would normally be renewed every month between August and mid- to late January, so dismissals before the end of the year are "quite different," one source said.

    Similar layoffs are happening at other companies in the iPhone supply chain, such as at fellow assembler Pegatron, which began terminating monthly contracts in November. A source close to Pegatron said that standard practice is to scale a 200,000-strong workforce back by tens of thousands each month until hitting a 100,000 minimum, but in 2018, the process began sooner.

    A Shenzhen-based parts supplier is even said to have asked 4,000 workers to take a "vacation" between October and March, at which point it will decide whether or not to begin layoffs.

    Foxconn's cost-cutting efforts are said to be going a step further, with restructuring merging the division responsible for MacBooks and iPads with a unit building Dell and Acer PCs.

    "Previously, each business unit had its own supporting staff, and by merging business divisions, Foxconn can slash some 50 percent of those supporting jobs and even condense managerial positions too," one source said.

    Apple recently warned about a $5 billion revenue shortfall for the December quarter, something it linked directly to poor Chinese iPhone sales. It put lesser blame on other markets, as well as factors like "foreign exchange headwinds," fewer carrier subsidies, and discounted battery replacements, which were 11 times more than the company had counted on.

    Some critics have pointed the finger squarely at Apple's pricing strategy. While the company has enjoyed high profit margins by targeting the "premium" market, Chinese brands like Huawei and Xiaomi now have quality phones that sell for much less than Apple's.
    The pricing theme keeps coming up, but there were no problems to arise before November. Phones sold well in September and October That says there was a specific event that occurred after this time. Could it be Tariffs? Uncertainty has a way of slowing sales. And pain caused in China are felt here. It’s not 1980. 

  • Reply 2 of 7
    OK I think it’s been well established that iPhone sales took a hit in the holiday quarter (and possibly the current quarter as well). John Gruber thinks Tim Cook is spooked by a possible recession in China and maybe world wide.

    https://daringfireball.net/2019/01/the_r_word
    edited January 18
  • Reply 3 of 7
    Even a fox knows enough to not go to the bathroom in it’s own den. Did the Chinese not think that cutting back on iPhone purchases would result in layoffs? You reap what you sow.
    SpamSandwich
  • Reply 4 of 7
    sacto joe said:
    Even a fox knows enough to not go to the bathroom in it’s own den. Did the Chinese not think that cutting back on iPhone purchases would result in layoffs? You reap what you sow.
    Do you think an iPhone buying Professional in Shanghai really thinks about a Factory Worker in Shenzhen?
    muthuk_vanalingam
  • Reply 5 of 7
    avon b7avon b7 Posts: 3,948member
    sacto joe said:
    Even a fox knows enough to not go to the bathroom in it’s own den. Did the Chinese not think that cutting back on iPhone purchases would result in layoffs? You reap what you sow.
    Well, they probably bought something and someone assembled it and probably in China. Just not an iPhone 

    If the reduction is due to industry contraction, your point is moot.

    edited January 18
  • Reply 6 of 7
    hentaiboy said:
    sacto joe said:
    Even a fox knows enough to not go to the bathroom in it’s own den. Did the Chinese not think that cutting back on iPhone purchases would result in layoffs? You reap what you sow.
    Do you think an iPhone buying Professional in Shanghai really thinks about a Factory Worker in Shenzhen?
    Sure they do! Communism teaches us all people are equal!
  • Reply 7 of 7
    adamcadamc Posts: 573member
    So it is Nikkei again perhaps I wait awhile before believing this report. 
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