Hon Hai Precision Industry Co (鴻海精密) is preparing to bring backup production online and raise hourly wages by more than one-third, after an exodus of workers threatened to disrupt output at the world’s largest iPhone plant ahead of the holidays.
Hon Hai, known internationally as Foxconn Technology Group (富士康科技集團), is grappling with mounting concern that a COVID-19 flare-up at its main Zhengzhou plant in China’s Henan Province could hurt production just as Apple Inc gears up for the crucial year-end season.
Hon Hai shares yesterday fell 1.44 percent, the worst decline in three weeks, underperforming the broader market’s 1.26 percent rise.
Photo: Carlos Garcia Rawlins, Reuters
To keep plants running at full speed, Hon Hai is raising hourly wages by as much as 36 percent to roughly 38 yuan (US$5.21) an hour for key positions, compared with the early days of iPhone 14 production around September, people familiar with the matter said, asking not to be identified because the move has not been made public.
On the operations side, Hon Hai has said that it might boost capacity at alternative sites.
The company also makes iPhones at a factory in Shenzhen, which together with Zhengzhou manufactures the majority of the world’s iPhones.
Representatives for the company declined to comment on wage plans.
“Further developments will be important as 4Q is the peak season for iPhone shipments,” Morgan Stanley analysts wrote.
“The potential impact on iPhone production is worth monitoring as Zhengzhou is one of Hon Hai’s major production sites, particularly for iPhone assembly,” they said.
The company said in a statement on Sunday that the situation at the Zhengzhou plant was under control with the cooperation of local authorities.
The “Zhengzhou park operation, in coordination with the government’s epidemic prevention, is gradually coming under control,” Hon Hai said.
“The group will also coordinate backup production capacity with our other parks to reduce any potential impact,” it added.
“We are deeply aware that it’s a ‘protracted war’ in terms of how to take care of over 200,000 workers and their security” in Zhengzhou, Hon Hai said in a stock exchange filing yesterday.
As of yesterday morning, Zhengzhou authorities said that there had been no severe COVID-19 infection cases recorded at the plant and the overall situation there was under control.
Additional reporting by CNA
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