Foxconn workers at the Taiwanese firm’s factory in Zhengzhou, China, have walked out over a pay dispute with the company. According to estimates, the factory in Zhengzhou accounts for more than 70% of the global assembly of Apple iPhones.

Yakub Pazhytsky | Nurphoto | Getty Images

Foxconn is offering big bonuses to lure workers back to its factory in Zhengzhou, China, after labor unrest over a pay dispute saw staff walk out, threatening to walk away an apple with iPhones in short supply during the crucial holiday season.

This month, employees clashed with security officials at the Zhengzhou plant, the world’s largest iPhone factory, which is run by Apple’s assembly partner Foxconn.

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The rare labor unrest came after employees took to social media to air their grievances over what appeared to be delays in bonus payments. Taiwanese firm Foxconn later apologized for what it called a “technical error” that led to a discrepancy in pay from what was promised to employees.

A Foxconn factory was also hit by an outbreak of Covid-19 last month, which led to workers fleeing the facility as the company moved to contain the outbreak by isolating infected people.

But with workers leaving the factory, Foxconn is now scrambling to make up for a labor shortage that threatens global iPhone supplies.

Foxconn said on Tuesday it would give a 500 yuan ($70) payout to returning workers, a 3,000 yuan bonus for those staying more than 30 days and a 6,000 yuan bonus for January. It came a day after the company said it would pay some workers up to 13,000 yuan in wages in December and January.

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Analysts at Evercore ISI estimate that the Zhengzhou factory accounts for more than 70% of Apple’s global iPhone production, underscoring the Cupertino giant’s reliance on China as a manufacturing hub, even as geopolitical tensions between the US and China rise and Beijing’s strict “zero Covid policy” causing disruptions in the supply chain.

According to a note published by Evercore ISI on Monday, the protests in Zhengzhou and the boycott of the election are likely to affect Apple’s earnings.

Analysts at Evercore ISI said demand for iPhones could fall by 5 to 8 million units in the December quarter, mostly for Apple’s high-end smartphones, and that could hurt earnings by $5 billion to $8 billion.

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