Members of the iPhone supply chain are forced to hike bonuses to attract new workers

By Scott Marlette Last updated Aug 7, 2021

Who wants a boring, repetitive job with low pay? Not as many workers in China as in the past according to the South China Morning Post. SCMP notes that companies that manufacture the Apple iPhone, such as Foxconn, are being forced to raise the bonuses that they give new workers as fewer young people in the country are interested in manufacturing jobs.

Good help is hard to find as Apple suppliers raise the amount of incentive bonuses in order to find more assembly line workers

Apple is planning on unveiling the iPhone 13 series next month and the contract manufacturers used by Apple to assemble the devices are producing them now. But in order to get these handsets built in time, these firms need more able-bodies to do the work. For example, in Foxconn’s Zhengzhou factory, which is estimated to build 80% of the world’s iPhone units, record high bonuses of 10,200 yuan ($1,578 USD) are being handed out to new workers who stay for at least 90 days assembling iPhones.

Apple CEO Tim Cook visits a Foxconn iPhone assembly line

The pressure is on Foxconn and other suppliers as Apple hopes to ship 130 million to as many as 150 million iPhone units during the second half of this year. That is based on an estimate made in June by Wedbush analyst Daniel Ives. The latter also says to expect the unveiling event to take place on September 14th with a launch taking place on September 24th.

Ives also estimates that Apple’s Asian supply chain will deliver the number of parts needed to produce 90 million to 100 million iPhone 13 series handsets during the second half of the year.

The hike in the starter bonus was made just two weeks after the amount was raised to 10,000 yuan ($1,542 USD) on July 23rd. This reveals how desperate Foxconn is to find qualified workers willing to do the job. Of the 10,200 yuan that Foxconn will give out as a bonus, 9,500 yuan goes to the worker while 700 yuan is given to the person who recruited the new employee.

Other iPhone suppliers besides Foxconn are looking to hire more able-bodied production workers

Other Apple suppliers are in the same boat as Foxconn is including touch screen provider Lens Technology which is recruiting 5,000 workers for its production line and another 2,000 to be quality inspectors. Those who work for more than 20 days a month for seven months will be eligible for a 10,000 yuan bonus which doubled in May from 5,000 yuan.

Another manufacturer that supplies Apple, Luxshare Precision, doubled its internal referral bonus from 2,500 yuan to 5,000 in May. Returning workers are receiving a bonus of 3,800 yuan.

Remember when Apple was talking about moving a large percentage of iPhone production out of China? At the time, there was a legitimate fear that the U.S. would impose an import tax on all Chinese made iPhone models shipped into the U.S. forcing Apple to either raise prices in the states, or accept a lower profit margin. Even though such a tax was never imposed for the iPhone, Apple has reportedly added more new suppliers from mainland China than any other country.

However, the labor force in China has been shrinking over the last decade as the working population (defined as the number of people in the 15 to 59 age bracket, declined from 70% 10 years ago to 63.4% by 2020. This has led to an increase in pay as fewer workers are available for a growing number of jobs. In Zhengzhou, per capita income was 9,225 yuan in 2010, the year the Foxconn factory opened.. Since then, per-capita income has soared to 24,783 yuan in the rural area where Foxconn finds most of its assembly line workers.

China remains the most important country in the iPhone supply chain as it is the home to more Apple suppliers than any other country in the world.

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