Foxconn raises hourly rate in Shenzhen to US$3.30 after Zhengzhou Covid-19 lockdown dents iPhone production

Apple’s largest contract manufacturer raised pay in Shenzhen by 14 per cent as it contends with a worker exodus at its largest iPhone plant in Zhengzhou
Foxconn also raised pay in Zhengzhou, where workers say conditions are still chaotic but access to medicine has improved

Apple

Iris Dengin ShenzhenandCoco Fengin Beijing

Published: 9:00pm, 8 Nov, 2022

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Foxconn Technology Group, Apple’s largest contract manufacturer, is ramping up hiring at its Shenzhen plant in the wake of production disruptions at its Covid-hit Zhengzhou campus, which houses the world’s largest iPhone factory.

Shenzhen’s iPhone production unit raised its hourly wage to 24 yuan (US$3.32) this week, a 14 per cent increase over the previous 21 yuan, according to two local hiring agents on Tuesday. The increase is the result of “the shortage of labour”, one agent said.

The increased demand for workers at Foxconn’s Shenzhen campus came after production capacity at its Zhengzhou factory was “significantly” impaired by an exodus of workers spurred by Covid-19 control measures that employees say led to “terrible” living conditions.

Foxconn woos fleeing workers with US$70 subsidy as exodus hits iPhone capacity

A Foxconn spokesman said on Tuesday that the pandemic situation in Zhengzhou is under control and the company is “coordinating the production capability from other sites as backup to minimise the possible impact”. The person did not elaborate on the Shenzhen plant’s hiring plans.

Foxconn, formally known as Hon Hai Precision Industry, said on Monday that it would “revise down” its outlook for the fourth quarter “due to the pandemic affecting some of [its] operations in Zhengzhou”, marking a shift from its previous statement that production remained stable.

Apple was also forced to break its silence as the situation in Zhengzhou weighed on production of its gadgets just ahead of the peak holiday shopping season.

Its facilities in the city are “ currently operating at significantly reduced capacity”, the company said in a statement on Sunday. “We now expect lower iPhone 14 Pro and iPhone 14 Pro Max shipments than we previously anticipated.”

The Zhengzhou campus, which at its peak had nearly 300,000 workers, has also stepped up its hiring for temporary workers, offering an hourly rate of 30 yuan for part-time jobseekers and a one-off 500 yuan (US$70) subsidy for workers who left during the lockdown, according to a notice posted by the iPhone production unit. Last week, the factory quadrupled its daily bonus to 400 yuan for workers who stayed.

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Chinese workers flee world’s largest iPhone factory after Covid outbreak

The chaos in Zhengzhou showcased the unpredictability and additional business costs imposed on companies operating in China by the country’s zero-Covid-19 policy. Foxconn’s Zhengzhou factory has been running under a closed-loop production mode for three weeks amid a local Covid-19 outbreak as the company and local authorities have scrambled to try to keep operations on track.

However, the situation has remained disorganised within the compound, two workers at the site said, in part because there are not enough quarantine spaces for those who test positive and close contacts. Dormitory management is also chaotic, they said, as some workers who were under quarantine were told to free up beds for newcomers because they had not showed up to work for at least three days.

One area that has improved is medical care, according to the workers. Access to the traditional Chinese medicine Lianhua Qingwen, the nonsteroidal anti-inflammatory drug ibuprofen and antiviral treatment Azvudine are all handed out for free to those in quarantine and help ease anxiety about falling sick, they said.