Foxconn takes unusual break from iPhone production


Tim Cook meeting an iPhone manufacturer in China.
Tim Cook meeting an iPhone manufacturer in China.
Photo: Apple

iPhone manufacturer Foxconn is taking the unusual step of cutting the hours of employees building Apple handsets during the upcoming weeklong Lunar New Year holiday next February.

The planned slowdown follows reports that Apple is cutting orders for the iPhone 6s and 6s Plus by up to 30 percent, which is causing investors to hammer Apple stock.

Foxconn’s plans reportedly differ from previous years, in which the Chinese manufacturer offered plenty of holiday overtime for workers in order to fulfill Apple’s orders.

Alongside the scaled-back schedule, Foxconn received 82 million yuan ($12.53 million) in subsidies from the government of Zhengzhou, Henan province, to limit layoffs at the company.

“We were already conservative about the first quarter,” said analyst Kylie Huang at Daiwa-Cathay Capital Markets in Taipei, regarding Foxconn’s Lunar New Year plans. “It’s not just iPhone slowdown, but all of the Chinese economy.”

While iPhone orders are reportedly down, it’s worth noting that the first quarter is historically slower for manufacturers, and similar stories have taken place in previous years.

Ultimately we won’t know whether iPhone sales really are slowing down until Apple releases its first-quarter (calendar year) earnings for 2016. Let’s not forget that iPhone 6s orders gave Foxconn its best September revenues in history just a few months ago.

Uunfortunately, that’s probably not going to stop Apple stock — and those of its manufacturers and suppliers — from taking a bit of a beating in the meantime.

Source: Reuters 

  • TeeJay2000

    More? I think I will take a break from watching stock quotes today. Cook should say something today to mass media (NOT an email to Cramer at CNBC) about the China situation, as he has done before.

  • zak2010

    Don’t most Chinese manufacturers shut down during the New Year window? I don’t think this is as big a news story as its being made out to be.

    • Luke Dormehl

      My understanding is that Foxconn is different in this regard, and has previously used New Year as a chance to offer workers some overtime, rather than shutting down like the majority of manufacturers.