Slumping iPhone Demand Forces Foxconn to Cut 50,000 Contract Workers Ahead of Schedule

The global tech slowdown is affecting some of Apple’s primary product assemblers, including Foxconn.

In order to meet the high demand that comes with new iPhone launches, manufacturers such as Foxconn (also known as Hon Hai Precision Industry Co.) and Pegatron rely on thousands of temporary employees throughout the August to January season. But this year the situation has led to some pretty big workforce cuts.

According to a new report from Nikkei, Foxconn, Apple’s primary iPhone assembler, has let around 50,000 contract workers go in China since October, months earlier than normal. The scale of the cuts is not necessarily deeper than previous years, it is simply significantly earlier, the report said, citing an industry source familiar with the situation.

“It’s quite different this year to ask assembly line workers to leave before the year-end,” the source told Nikkei.

Apple reportedly told suppliers earlier this year to cut back iPhone production by an estimated 10 percent, and companies involved in the iPhone supply chain, like Foxconn, appear to be responding in kind. Nikkei reports that Apple’s second-biggest manufacturer, Pegatron, also reduced its number of temporary workers by tens of thousands.

The report also explains that other companies have apparently given employees “extended vacations” to avoid laying them off. Currently, these workers are technically still employees but a final decision on their status is expected by March.

Foxconn is currently preparing for a complete company restructuring process, merging its business units that build iPads and MacBooks with those that build Dell and Acer computers. This restructuring means significant cuts to Foxconn’s management, human resources, administration, accounting, and utility support jobs. These cuts total to around 100,000 jobs by the end of 2018 and cost cuts of $2.96 billion USD by the end of 2019.