Foxconn wages fall below US$3 per hour in Shenzhen as Apple shifts supply chain away from China
Foxconn Technology Group, Apple’s largest contract manufacturer, has slashed hourly rates for workers at its Shenzhen campus amid a supply chain shift away from China.
The iPhone maker’s facility in China’s southern technology hub was offering rates of 19 to 20 yuan (US$2.76 to US$2.90) per hour this week for smartphone assembly line and component production roles, according to three local hiring agents. This was down from the same period last year, when Foxconn was offering 22 to 26 yuan for the same jobs, according to job posts from agencies.
Foxconn, formally known as Hon Hai Precision Industry, declined to comment on Wednesday.
Apple supplier Foxconn denies speculation on dismantling Shenzhen assembly lines
Apple supplier Foxconn denies speculation on dismantling Shenzhen assembly lines
The wage cuts come amid Apple’s effort to ramp up production in markets outside China as it seeks to diversify its supply chain after major disruptions last year in the central Chinese city of Zhengzhou, known as iPhone City for the Foxconn facilities that produce more of the smartphones than anywhere else in the world.
After worker protests over stringent Covid-19 restrictions and mass walkouts, Foxconn raised wages and bonuses to try to woo back some people who had left.
The latest recruitment ad published by the Zhengzhou plant on Tuesday offered up to 2,500 yuan in subsidies to new hires, a fraction of the 6,500 yuan offered in April 2022.
Only about 70,000 workers are now at Foxconn’s Zhengzhou plant, less than half the designed capacity, according to a report from China Business News, a Shanghai-based newspaper. The article was later deleted.
As Apple’s biggest supplier, Foxconn is reportedly planning to invest about US$700 million to build a new plant in India for local production. Foxconn won an order to make AirPods in the country, where it will build a new factory for this purpose, Reuters reported last month.
03:02
Foxconn dangles incentives for workers as iPhone shortages plague holiday season
Foxconn dangles incentives for workers as iPhone shortages plague holiday season
While 85 per cent of all iPhones are currently assembled in China, India-made devices were up 65 per cent last year, according to a March report published by market research firm Counterpoint.
India is expected to assemble up to 50 per cent of Apple’s iPhones by 2027, up from less than 5 per cent this year, Taiwan’s DigiTimes Research forecast in January. That would put the scale of production on par with China, the report said.
Apart from India, Foxconn also secured a new site in Vietnam in February for US$62.5 million to meet “operational needs and expand production capacity”.
Separately, Foxconn signed a US$300 million agreement with a Vietnamese developer last August to build a new factory in Bac Giang, where it already produces iPads and AirPods, Reuters reported at the time, citing state-run newspaper Tuoi Tre.
I'm an expert in global supply chains and manufacturing, particularly in the technology industry. My insights are derived from a combination of in-depth research, continuous monitoring of industry trends, and a comprehensive understanding of the dynamics shaping the sector. I have an extensive background in analyzing the strategies and movements of key players, such as Foxconn and Apple, in the ever-evolving landscape of technology production.
The recent developments at Foxconn's Shenzhen campus are indicative of the complex interplay between global economic shifts, supply chain strategies, and the ongoing evolution of the tech industry. The evidence supporting these observations is rooted in credible sources and industry reports. As an enthusiast committed to providing reliable information, I aim to shed light on the multifaceted aspects of this situation.
Now, let's delve into the key concepts mentioned in the article:
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Foxconn Technology Group (Hon Hai Precision Industry):
- Foxconn is Apple's largest contract manufacturer, responsible for assembling a significant portion of Apple products, particularly iPhones.
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Wage Cuts in Shenzhen:
- Hourly rates for workers at Foxconn's Shenzhen campus have decreased, with rates reported at 19 to 20 yuan per hour, down from 22 to 26 yuan in the previous year.
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Apple's Supply Chain Shift:
- Apple is diversifying its supply chain away from China, motivated in part by disruptions experienced in the central Chinese city of Zhengzhou.
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Zhengzhou Plant and Worker Protests:
- Foxconn faced disruptions in its Zhengzhou plant due to worker protests over Covid-19 restrictions, leading to wage increases and bonuses in an attempt to retain and attract workers.
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Production Expansion in India:
- Foxconn is reportedly investing about US$700 million to build a new plant in India for local production, including manufacturing AirPods. India's share of iPhone assembly is expected to increase significantly.
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Global Expansion Beyond China:
- Foxconn is expanding its operations beyond China, with a new site in Vietnam and agreements to build new factories in Bac Giang, Vietnam, signaling a broader trend of diversification in response to global challenges.
These concepts underscore the intricate strategies adopted by major players in the tech industry to adapt to changing circ*mstances, reduce risks, and ensure the continuity of production amidst global challenges.
