Foxconn offers $1800 bonus to workers who stay in iPhone city

Apple partner Foxconn is offering bonuses of as much as $1 800 to existing workers at its Zhengzhou facility, hoping to sustain the staff levels it needs to run the world’s largest iPhone factory.

Foxconn, also known as Hon Hai Precision Industry Co., will top up wages by as much as 13 000 yuan per month in December and January for full-time workers who’d joined at the start of November or earlier, the company said in a notice over the weekend. Last week, Foxconn offered similar bonuses for workers opting to leave its campus, largely to usher out new arrivals who’d participated in violent protests against virus lockdowns.

The unusually generous bonus reflects Foxconn’s urgent need to get assembly lines back up to full speed after a month of dealing with Covid curbs and disruptions that culminated in unrest last week. The Zhengzhou campus, which normally houses upwards of 200 000 staff, is where the vast majority of Apple’s iPhone Pro models are assembled. More than 20 000 new hires are reported to have left after the protests.

Apple has said it’s working closely with Foxconn to restore operations and both companies have expressed a commitment to ensuring worker safety.

The iPhone 14 Pro and Pro Max are Apple’s most in-demand handsets this year, offsetting slumping sales for its regular iPhone 14 editions. The Foxconn situation serves up another reminder of the dangers for Apple of relying on a vast production machine centered on China at a time of unpredictable policy and uncertain trade relations. The US company warned this month that shipments of its newest premium iPhones will be lower than previously expected — just ahead of the peak holiday shopping season.

Analysts at Morgan Stanley cut their iPhone Pro output estimates for the current quarter by 6 million units earlier this month. In a worst-case scenario of prolonged lockdowns impacting assembly at Zhengzhou, Foxconn is seen risking as much as 36% of iPhone revenue or 20% of its overall sales in the quarter.

© 2022 Bloomberg

Melissa E. Romero

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