Apple 2.0

Covering the business that Steve Jobs built

Apple may be to blame for Foxconn's hiring freeze after all

February 21, 2013: 6:42 AM ET

But not because of slowing iPhone 5 sales, as had been reported

Foxconn workers. Photo: Photograph: Kin Cheung/AP

Foxconn workers. Photo: Photograph: Kin Cheung/AP

FORTUNE -- Apple's (AAPL) battered shares took another hit Wednesday -- down $8.84, nearly 2%, for the day -- after the Financial Times attributed a hiring freeze at the Foxconn factories that assemble many of Apple's products to a slowdown in iPhone 5 production.

The stock didn't recover, even after a Foxconn spokesman flatly denied that the freeze had anything to do with the iPhone 5.

Several alternative explanations were quickly put forward:

  • A slowdown in 9.7-inch iPad sales (Fubon Securities analyst Arthur Liao)
  • A decline in Hewlett-Packard (HPQ) PC sales (UBS's Steve Milunovich)
  • A shift to robotic production by Foxconn (CBN Daily)
  • A shift by Apple to other manufacturers (Business Insider's Nicholas Carlson)
  • Fewer workers going AWOL after the Chinese New Year break (RBC's Amit Daryanani)

What's interesting about that last explanation is that it puts the blame squarely back on Apple.

Historically, according to Daryanani, 20%-30% of Chinese workers don't bother to come back after the holidays to factory jobs where the pay is low and working conditions harsh. This year, according to his sources, return rates may have been closer to 90%.

Could that have anything to do with the fact that Foxconn, pressured by Apple and local workers rights groups, has more than doubled wages and cut overtime hours?

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Philip Elmer-Dewitt
Philip Elmer-DeWitt
Editor, Apple 2.0, Fortune

Philip Elmer-DeWitt has been following Apple since 1982, first for Time Magazine, and now on the Web for

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