The slowdown in iPhone sales has forced Foxconn — Apple’s largest vendor — to cut down the salaries and other benefits to the employees working in its iPhone factories. The report from South China Morning Post paints a dreary picture of Foxconn’s Zhengzhou factory and how the company is cutting back on small perks to its employees.

Foxconn has had to cancel shuttle bus services from its Zhengzhou factory which has forced employees to walk as much as 40 minutes to get to the rooms where they stay. Usually, shuttle bus services are suspended around the Lunar New Year holiday but it resumes after that. However, due to the slowdown in iPhone sales, Foxconn has decided to not resume the shuttle services. It has also stopped offering free laundry services to factory workers and now charges them $1 for washing a load of laundry.

In an unprecedented move, Foxconn has also cut the salaries of employees working in its factories at the end of last year. While peak iPhone season usually lasts for around four to five months, it only lasted for around 20 days. As per a Foxconn worker, his salary was reduced from 4,000 yuan in October — the peak iPhone production season — to 3,000 yuan in November.

“In September, our line supervisor told us that Apple added a new order for three million iPhone 8 Plus [units]. It only took us about 20 days to finish the production because we worked 18 hours a day in two shifts, including weekends. The peak season didn’t last long at all,” he said.

The report highlights that Henan mobile exports — where the factory is located — have declined by 23.7 percent in January YoY. Apart from iPhones, Foxconn also produces smartphones for a number of other companies. However, just like Apple, other OEMs are also seeing a slowdown in their smartphone sales.

A report from earlier this year had claimed that Apple had to remove around 50,000 seasonal contract workers from its payroll earlier than usual due to the low iPhone demand. It simply did not renew the contracts of such employees once it expired. It even sent some employees on an extended vacation until March.

Our Take

Foxconn and other vendors will have to reduce their workforce and cut down on their expenses as global smartphone shipments decline. The smartphone market has matured and all smartphone OEMs now need to realign themselves accordingly.

[Via SCMP]

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