Foxconn Cut 50,000 Contract Workers Months Ahead of Schedule Due to Poor iPhone Demand

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Apr 12, 2001
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Apple supplier Foxconn has let go around 50,000 contract workers at its iPhone factory in Zhengzhou, China, with the first cuts happening in October 2018. As one source with knowledge of Foxconn's plans told Nikkei, the scale of the cuts is not what stands out, but the fact that it's significantly earlier than previous years.

"It's quite different this year to ask assembly line workers to leave before the year-end," the source stated. Foxconn typically renews workers' contracts every month from August until January, at which point the workforce is scaled back for slow iPhone production season. This year, those cuts came as much as three months early.


The same is true for other Apple suppliers according to today's report, with Pegatron canceling monthly labor contracts last November. One source said that Pegatron's cuts "happened sooner than in the past because of poor demand," referring to the iPhone.

Even smaller companies in Apple's supply chain reportedly cut down on their workforce, with one unnamed component supplier based in Shenzhen asking 4,000 workers to take an extended vacation from October to March. On March 1, the company will decide whether or not to lay the workers off.

For Foxconn, the company is preparing for restructuring throughout the company, merging business units that make iPads and MacBooks with the division making Dell and Acer computers. This means "steep cuts" to management, human resources, administrations, accounting, and utility support jobs, totaling 100,000 jobs removed by the end of 2018 and costs cut by $2.96 billion in 2019.

Apple in late December told its suppliers to cut production on new iPhones by 10 percent over the next three months, coming on the back of reports about weak iPhone sales during the holiday quarter. In early January, Apple CEO Tim Cook called reports claiming the iPhone XR was a flop "bologna," stating the device has been the most popular iPhone "every single day" since it launched.

Amid all of this, many Apple suppliers cut their 2019 sales forecasts, including Taiwan Semiconductor Manufacturing Company and Nidec. Specifically for the China market, these suppliers noted an "extraordinary" drop in demand for high-end smartphones.

Article Link: Foxconn Cut 50,000 Contract Workers Months Ahead of Schedule Due to Poor iPhone Demand
 

Jesus on OSX

macrumors member
Apr 29, 2003
78
41
Apple would rather bleed marketshare just so they can protect that 38% profit margin. It's a fairly mature market now, there aren't as many revolutionary features in today's phones. Hard to believe that people don't want to shell out $1500 for a phone.
 
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Baymowe335

macrumors 603
Oct 6, 2017
6,056
11,122
Likely any impacted is already reflected in the guidance that was adjusted.

Again, this is a problem very specifically related to a slowdown in China.

The prices weren’t too high in markets like the US, Canada, Spain, Italy, Germany and Korea where records were set. Prices won’t be dropping there, but they might in China and already have.
 

Mackinjosh

Suspended
Aug 21, 2014
1,181
1,697
Where's all those "Oooooo so Apple is doomed again?!" people who insisted this was all business as usual when these articles started popping up late last year?

Looks like the guy in charge of innovation at Apple has taken a 6 year sabbatical.
Nah, he was still there coming up with brilliant ideas like Butterfly keyboards and Touch Bars.
 

TantalizedMind

macrumors 6502a
Feb 5, 2007
743
247
All I want to say is I love my Product Red iPhone XR but I have not seen ONE OTHER SINGLE PERSON EVER with an XR in the wild.

I work in the tech field and I see XS’ and S9’s all day. And lately a **** ton of Pixels. I’ve actually had a few people stop and ask me why I bought a red phone instead of black...

I guess since I don’t have a black iPhone in a generic black OTTERBOX case that I stand out too much. :rolleyes:
 

Mr. Dee

macrumors 68020
Dec 4, 2003
2,345
3,206
Jamaica
Noticed how Phil Schiller is silent in all of this? Apple bet wrong big time and their unofficial apologist John Gruber is looking for every excuse in the book.

Jonathan Morris of TLD made a sound recommendation to Apple in an interview I watched on YouTube yesterday. Apple should have taken a good will risk, absorb the cost of the iPhone XR and sell it for $599. If they did that, I don’t think Samsung or any other brand could stand a chance with 5G in 2019.

But the greed machine took ahold because of the iPhone X success going into 2018. Consumers are not blind. I bought the iPhone X knowing I will not be buying another iPhone for a while. The older models are still doing well in addition to the battery upgrade. But I think Apple just allowed cash hoarding top get the best of them and they really need to understand this is a device that will become obsolete over time. It’s not a timepiece.

The iPhone XS should have been pushed down to $799 in its second year because the company has made enough on the first generation to see the ROI for RD. Stop with this its expensive to make theory.
 

mdatwood

macrumors 6502a
Mar 14, 2010
705
263
East Coast, USA
Apple is innovating. All the custom silicon (Ax/Tx), things like the screen, cameras, and FaceId. All of those items make the iPhones more expensive to manufacture. Apple's company margins have remained the same while raising prices. If the increase in service revenue is also factored in, along with its naturally high margin, then the iPhone margins have been shrinking with every generation.

Maybe Apple got too far out in front with innovation causing the phone price to go up too much too quickly. Simply complaining about prices is not understanding the whole situation.
 

iRutherford

Suspended
Oct 30, 2018
319
496
Columbus, OH
Apple cannot lower the prices abruptly. It's a damaging solution when we factor in the impact it will have on the brand, long term. It will set a precedent that Apple can price their devices lower than the premiums they're asking now, leading many to expect those "low prices" going forward, making Apple lose their premium brand status. It will also make it more obvious that they're struggling and that they're overpricing.

Also, in a land of lawsuit-obsessed people (America), they surely will receive flak from them for not being offered the new price points even if the phones have been released many months ago. Trust me, I worked for a mobile carrier once, and we have people demanding free phones since they're "still in the contract," even if the damage was caused by their own recklessness, threatening us with lawsuits if they don't get their way.
 

X--X

macrumors 6502
Jun 11, 2015
299
1,057
Apple cannot lower the prices abruptly. It's a damaging solution when we factor in the impact it will have on the brand, long term. It will set a precedent that Apple can price their devices lower than the premiums they're asking now, leading many to expect those "low prices" going forward, making Apple lose their premium brand status. It will also make it more obvious that they're struggling and that they're overpricing.
COMPLETELY WRONG

Please watch this 2 minute explanation from Steve Jobs

 
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DNichter

macrumors G3
Apr 27, 2015
8,963
10,076
Philadelphia, PA
Kind of expected to me. We've reached a point where iPhone's 6 and up are still performing very well. There just isn't a ton of motivation to buy the new iPhone every year. I don't think it's an issue or anything, as when the time comes, they will likely stay with iPhone due to that type of longevity and support. Apple's recent push into services makes a ton of sense for them. The iPhone will plateau, but that doesn't mean it's going anywhere. There really isn't any crazy innovation when it comes to phone hardware anymore, it all comes down to software. iOS is still the best when it comes to performance, privacy, security, ecosystem, apps, and support. I'm personally not really looking/caring for any major advances in a phone, just needs to work well and have the aspects I mentioned above.
 

lec0rsaire

macrumors 68000
Feb 23, 2017
1,508
1,444
Apple needs to dump the XR and move the XS to $799 64 GB. Admit the mistake and move on. I hope they really don’t plan on releasing another LCD iPhone in 2019.

This is not 2010 anymore when the Chinese didn’t have their hands on the latest tech. Sony once dominated consumer electronics and look at them now barely hanging on as a high-end TV manufacturer. All of the other Japanese giants quit years ago.
 

Ermir444

macrumors regular
May 12, 2017
107
99
Keep selling them good iPhones at 1k+ Tim. Keep selling that XR 720p screen tech from 2010 at $750+. Keep nickle and dimming your customers on dongles and astronomical storage upgrade prices.

What did you think was going to happen genius???
 
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