Foxconn workers at the Taiwanese company’s Zhengzhou, China factory have walked out over a pay dispute with the company. The Zhengzhou factory is believed to account for more than 70% of Apple’s global iPhone assembly.

Jakub Pozhicki | 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 employees walk out, threatening to walk out An apple with iPhone shortages for the crucial holiday season.

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

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The rare unrest among workers emerged after employees took to social media to air their grievances over what appeared to be a delay in bonus payments. Taiwanese firm Foxconn later apologized for what it called a “technical error” that caused a discrepancy in pay compared to what was promised to staff.

Foxconn’s factory was also hit by a Covid-19 outbreak last month, causing workers to flee the facility as the company tried to control the outbreak by isolating infected people.

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

Foxconn said on Tuesday it would give a payment of 500 Chinese yuan ($70) to returning workers, a 3,000 yuan bonus for those who stayed more than 30 days and a 6,000 yuan bonus for January. It comes a day after the company said it would pay wages of up to 13,000 yuan to some workers 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-based giant’s reliance on China as a manufacturing hub, even as geopolitical tensions between the US and China rise and Beijing strictly “zero “Covid” policy causes supply chain disruptions.

The protests and walkouts in Zhengzhou are likely to impact Apple’s earnings, according to a note published by Evercore ISI on Monday.

Analysts at Evercore ISI said iPhone demand could be hit by 5 million to 8 million units in the December quarter, mostly from the top end of Apple’s smartphone lineup, and that could negatively impact revenue by 5 to 8 billion dollar.

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