Foxconn’s problems will hurt the giant Chinese iPhone factory even more, as more workers will be laid off -source

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TAIPEI – Foxconn’s flagship iPhone factory in China is set to see further reductions in November shipments this week due to recent labor unrest, a source with direct knowledge of the matter said on Friday as thousands of workers left the site.

The source said the company could see more than 30% of the site’s November production affected, up from internal estimates of up to 30% when labor problems began at the factory in late October.

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The site, which is the only factory where Foxconn manufactures premium iPhone models, including the iPhone 14 Pro, is unlikely to resume full production before the end of this month, the source added.

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The world’s largest Apple iPhone factory is grappling with severe COVID-19 restrictions that have fueled discontent among workers and halted production in the run-up to Christmas and the January New Year holiday as many workers have either been isolated or fled the plant.

That raised concerns about Apple being able to deliver products for the busy holiday season.

New workers, most of whom were hired in recent weeks, clashed with security guards at the Zhengzhou plant in central China on Wednesday.

Many claimed they were cheated of factory compensation benefits, while others complained of sharing dormitories with co-workers who had tested positive for COVID.

Foxconn apologized for a “technical error” in hiring on Thursday and later offered 10,000 yuan ($1,400) in protest to new hires who agreed to resign and leave.

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The source said more than 20,000 workers, mostly new workers who had not yet worked on the production lines, took the money and left. Videos posted on Chinese social media on Friday showed crowds and long lines of luggage-laden workers queuing for buses.

“Time to go home,” one person wrote.

Foxconn, formally known as Hon Hai Precision Industry Co, declined to comment. Apple, which said Thursday it had workers at the factory, did not immediately respond to a request for comment Friday.

The company employed more than 200,000 workers before the troubles began. The nearly 1.4 million square meter (15 million square foot) sprawling facility features dormitories, restaurants, basketball courts, and a soccer field.

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Another Foxconn source familiar with the matter said some new hires have left the campus, but did not elaborate on the number. The person says that because those who are leaving have not yet been trained or started, their departure will not cause further damage to current production.

“The incident has a big impact on our public image, but it has little impact on our (current) capabilities. It does not affect our current capabilities,” the source said.

“There’s a lot that corporates can do to prevent a pandemic… It’s been a problem for a while. It’s a problem that everybody faces,” the person said, pointing to other labor unrest caused by strict COVID restrictions, including the shakeup at Quanta, another Apple supplier, in May.

Foxconn shares fell 0.5%, underperforming the broader market, which ended flat. ($1 = 7.1616 Chinese Yuan Renminbi)

(Reporting by Yimou Lee; Additional reporting by Brenda Goh; Editing by Anne Marie Roantree, William Mallard and Gerry Doyle)

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