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

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.

iphone xs vs xr
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.

Tag: Foxconn

Top Rated Comments

h3ysw5nkan Avatar
48 months ago
Expected given the price and lack of innovation
Score: 61 Votes (Like | Disagree)
yaxomoxay Avatar
48 months ago
I can provide a solution for this, Apple: CUT the prices.
The only time prices should be this high is when there's a big leap from the previous generation.
Score: 56 Votes (Like | Disagree)
X--X Avatar
48 months ago
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

Score: 53 Votes (Like | Disagree)
Mr. Dee Avatar
48 months ago
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.
Score: 36 Votes (Like | Disagree)
Jesus on OSX Avatar
48 months ago
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.
Score: 24 Votes (Like | Disagree)
Ermir444 Avatar
48 months ago
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???
Score: 23 Votes (Like | Disagree)

Popular Stories

iOS 16

Apple Releases iOS 16.0.2 With Bug Fixes for iPhone 14 Pro Camera Vibration, Copy/Paste Issue and More

Thursday September 22, 2022 1:04 pm PDT by
Apple today released iOS 16.0.2, addressing a number of bugs that iPhone 14 owners have been experiencing since the new devices launched. iOS 16.0.2 comes two weeks after the launch of iOS 16, and it follows iOS 16.0.1, an update made available to iPhone 14 owners on launch day. The update is available for all iPhones that are capable of running iOS 16. The iOS 16.0.2 update can be...
apple watch series 7 aluminum colors yellowbg

Don't Want the Apple Watch Ultra or Series 8? Amazon Has Record Low Prices on Series 7 Models This Week

Friday September 23, 2022 6:56 am PDT by
The Apple Watch Series 8 and Apple Watch Ultra are now available to purchase, but if you aren't interested in these updates you can save a lot of money on Series 7 models right now on Amazon. Note: MacRumors is an affiliate partner with Amazon. When you click a link and make a purchase, we may receive a small payment, which helps us keep the site running. The best deals are on cellular...
Dynamic Island For Android Users Feature

Android App Copying iPhone 14 Pro's Dynamic Island Released on Play Store

Thursday September 22, 2022 7:57 am PDT by
A copycat version of the iPhone 14 Pro's Dynamic Island has arrived on Android's Google Play Store in the form of an app called "dynamicSpot." The app, still in beta, offers customers several different experiences at the top of their smartphones. In its current form, dynamicSpot offers playback control for songs, timers, battery status, and more features coming soon, according to the app's...
maxresdefault

Video Review: Four Days With the iPhone 14 Pro Max

Wednesday September 21, 2022 7:49 am PDT by
Apple on Friday released the new iPhone 14 models, and MacRumors videographer Dan picked one up on launch day. He's been using the iPhone 14 Pro Max non-stop since it came out, and over on the MacRumors YouTube channel, has shared his initial thoughts on the day-to-day experience with the latest iPhone. Subscribe to the MacRumors YouTube channel for more videos. Dan's mini review highlights...
14 vs 16 inch mbp m2 pro and max feature 1

New 14-Inch and 16-Inch MacBook Pros Reportedly Launching Later This Year

Friday September 23, 2022 7:08 am PDT by
Apple plans to release new MacBook Pro models in the fourth quarter of 2022, according to supply chain publication DigiTimes. The report does not mention specific models, but it very likely refers to the next-generation 14-inch and 16-inch MacBook Pros given that the 13-inch model was already updated earlier this year. There has been uncertainty surrounding the timing of new 14-inch and...
facebook meta

Meta Sued Over Tracking iPhone Users Despite Apple's Privacy Features

Thursday September 22, 2022 5:12 am PDT by
Meta is facing a new proposed class action lawsuit that accuses it of tracking and collecting the personal data of iPhone users, despite features and policies made by Apple which are meant to stop that same type of tracking. In August, it was revealed that with the Facebook and Instagram apps, Meta can track all of a user's key taps, keyboard inputs, and more, when using the in-app browser....
AirPods Max 2022 Colors

Ten Things AirPods Pro 2 Tell Us About AirPods Max 2

Saturday September 24, 2022 1:00 am PDT by
Upon the release of the second-generation AirPods Pro, the AirPods Max became the oldest current-generation AirPods product still in Apple's lineup. Introducing several new features like Adaptive Transparency and the H2 chip, the second-generation AirPods Pro may provide some of the best indications yet of what to expect from the second-generation AirPods Max. Almost two years later, rumors...
new airpods pro ear tips

Apple Explains Why Second-Generation AirPods Pro Ear Tips Are Incompatible With Original AirPods Pro

Thursday September 22, 2022 3:12 pm PDT by
Apple today explained why the new silicone ear tips for the second-generation AirPods Pro are not officially compatible with the original AirPods Pro. In an updated support document, Apple said the original AirPods Pro ear tips have "noticeably denser mesh" than the second-generation ear tips. Apple did not provide any additional details, but the mesh density could result in acoustical...
AirPods Pro Second Generation 2 Pairing Feature 1

AirPods Pro 2 Engravings Appear in iOS During Pairing and Connecting

Friday September 23, 2022 9:40 am PDT by
Customers who personalize their second-generation AirPods Pro charging case with an engraving will now have that engraving reflected directly on iOS as they pair and connect their AirPods Pro. Apple allows customers to personalize their AirPods Pro charging case with a special engraving that can include select emojis and Memojis. Unlike before, starting with the second-generation AirPods...