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This won't help get rid of those iPhone 5 shortages: China Labor Watch claims 3K-4K Foxconn...

  • Friday, October 5, 2012, 4:46 PM ET
    This won't help get rid of those iPhone 5 shortages: China Labor Watch claims 3K-4K Foxconn workers at a plant in the city of Zhengzhou went on strike this afternoon, protesting over a lack of quality control training needed to meet the iPhone 5's (AAPL -2.1%) exceptional requirements, and demands to work during a holiday. Multiple iPhone 5 production lines were reportedly put into a "state of paralysis." Two weeks ago, Foxconn had to shut down another Chinese plant due to a riot. Update: Foxconn denies a strike occurred, and claims production remains on schedule.
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This news story has 61 comments:

  •  
    They should make more AAPL products in the USA and not be subjected to these increasingly disruptive assembly delays in PROC. If Foxconn shuts down AAPL would be temporarily paralyzed. Maybe they will learn a lesson...
    5 Oct 2012, 05:08 PM Reply Like
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    Right. Because American manufacturers have never suffered from work stoppages by labor.
    5 Oct 2012, 06:11 PM Reply Like
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    I can send Unions salivating at the opportunity. And the Chinese government ready to let heads roll.
    5 Oct 2012, 06:21 PM Reply Like
  •  
    Or pay these folks a decent wage. Its like Rahm Israel Emanuel is in charge
    5 Oct 2012, 07:07 PM Reply Like
  •  
    This mentality in this type of website is beyond ridiculous but you can always keep dreaming that those manufacturing jobs will come back to the US.
    6 Oct 2012, 12:49 AM Reply Like
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    Or maybe Seeking Alpha should stop reporting rumors as news. According to Reuters, Foxconn denies there was a strike or any workplace stoppage, and that "isolated incidents occurred and were immediately addressed and measures taken, including providing additional staff for the lines in question."

    Foxconn also said that "employees who worked over China's National Day break did so voluntarily and were paid three times their usual hourly compensation, as demanded by law." http://reut.rs/Q3l9Ef

    Sadly, at least as far as Apple is concerned, SA has become largely a site for rumors and speculative articles rather than intelligent analysis of business facts. I guess this is the difference between a news organization and a blog. I hope that SA will decide to exercise some editorial oversight otherwise there will be no point in reading its content.
    6 Oct 2012, 07:55 AM Reply Like
  •  
    The post has been updated to note Foxconn's response. The report about the strike was picked up by many major news sites, not just Seeking Alpha. If you want to criticize Seeking Alpha for making note of it, also be sure to criticize CNN, Bloomberg, CNET, and many others.

    http://bit.ly/SCMgtL
    6 Oct 2012, 01:37 PM Reply Like
  •  
    Obama convened a meeting of Silicon Valley "big wigs" soon after he was elected, and asked those present when the jobs "sent" to China would return to the USA. Steve Jobs came him a two word answer : "They're NOT". Then, he described the type of production efficiencies the Chinese routinely provided, all of which would be laughed at by US labor leaders.

    When you consider that US-based UAW assembly line workers for GM really make their salaries and benefits from the backs of Chinese GM workers making $400/month, you can get an idea of the size and scope of the adjustment that US labor market would have to accept to be competitive with the Chinese. Don't hold your breath. BTW - An iPhone manufactured in the US would probably cost around $1,000, after all was said and done.
    6 Oct 2012, 03:41 PM Reply Like
  •  
    Like many, if you have to go through the anguish of finding a scratch on your iPhone when you open the box you can ease your mind knowing the quality control people are being dealt with.

    http://bit.ly/SD9kJ2
    6 Oct 2012, 04:11 PM Reply Like
  •  
    css this, admittedly unsubstantiated, report is distressing. What would you suggest could be done to help these people you are obviously so concerned about? And could these same solutions extend to the other laborers who I know you must be equally concerned about? I mean, not just the makers of Apple products, or even all electronics, but the makers of your clothes and the pickers of the fruit you eat... I know you must be terribly concerned for the well being of these people as well, whose working conditions and pay are every bit as challenging.

    What are you saying should be done to alleviate all the suffering that so greatly concerns you?
    6 Oct 2012, 04:46 PM Reply Like
  •  
    would you prefer to pay for $2000 iphones?
    7 Oct 2012, 01:28 AM Reply Like
  •  
    crazy to think the jobs will ever come back here. maybe to mexico instead.
    7 Oct 2012, 01:43 AM Reply Like
  •  
    Well said.SA needs fact-check it's information before printimg it!
    7 Oct 2012, 02:22 AM Reply Like
  •  
    @css

    Well, that's troubling.
    let's hope the beatings are an exaggeration and that's it really more about protests and striking.

    One interesting note on all of this that Apple‘s Senior Vice President of Marketing Phil Schiller says the scratches are 'normal'.

    "Any aluminium product may scratch or chip with use, exposing it's natural silver color. That is normal."
    http://onforb.es/QW1p3L
    7 Oct 2012, 12:45 PM Reply Like
  •  
    I agree with you, but news organisations are indeed no better. They are actually very often much worse, as they sell themselves as credible sources of information, when they clearly are not credible.
    7 Oct 2012, 07:43 PM Reply Like
  •  
    Wage inflation in China will continue to challenge those looking for cheap labor.
    5 Oct 2012, 05:18 PM Reply Like
  •  
    Wait till Japan and China square off, then the "overpriced"American worker will start to look like a bargin.
    5 Oct 2012, 05:33 PM Reply Like
  •  
    3-4K workers? Isn't that a drop in the bucket?
    5 Oct 2012, 05:37 PM Reply Like
  •  
    yes, they employ something on the order of 700 thousand people in china, to say nothing of the brazil plants etc
    5 Oct 2012, 05:41 PM Reply Like
  •  
    Time to move to Vietnam.
    5 Oct 2012, 05:46 PM Reply Like
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    Yes, Apple should have more plants in different countries with more capacity to produce in case other plant shut down.
    5 Oct 2012, 06:15 PM Reply Like
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    right to work state in the usa, may do the trick
    has to be non union otherwise they are screwed
    5 Oct 2012, 05:50 PM Reply Like
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    I can just imagine American workers living in dormitories with a couple of dozen bunk beds per room. Going home for the weekend. If we're lucky we can get Congress to eliminate the minimum wage and really level the playing field with China.

    Sweet.
    5 Oct 2012, 06:42 PM Reply Like
  •  
    holy hell there would be riots.....
    5 Oct 2012, 07:01 PM Reply Like
  •  
    I think they are doing that in North Dakota but they are making a lot more money than those Foxconn employees.
    5 Oct 2012, 08:02 PM Reply Like
  •  
    The timing of this is interesting considering that AAPL major competitor just received a very negative report on its own China Operations.
    http://bit.ly/Ob8ccU
    This is a minor blip.
    5 Oct 2012, 05:57 PM Reply Like
  •  
    Interesting...I guess these types of issues only apply to Apple, at least in the eyes of the media.
    5 Oct 2012, 06:10 PM Reply Like
  •  
    I've been buying puts every move up betting on supply disruptions and predictable yield issues with several components.
    5 Oct 2012, 06:38 PM Reply Like
  •  
    The fools buying puts or shorting Apple at this cheap price (yes, Apple remains very cheap at 650+) must be kamikaze pilots. Yes, it is possible to scalp profits on the downside, but much smarter to buy on the dips. Inevitably, Apple will be above $800 and maybe as soon as January. This downdraft from several relativgely insignificant bad press stories, does not change the fact that Apple is by far the best, most profitable, fastest growing large cap on the planet with a low PE, mountains of cash, 100 million affluent loyal customers and very little real competition. Yes, Android of course, but Google has already had its run up and has a miuch higher PE now than Apple, which is ridiculous. This is a stock bound to explode to the upside any day or week now, at a moment's notice. It was the same thing after Job's death when I bought heavily on the sell-off. Within a short time, I was sitting on a mountain of profit, because Apple has very few problems and the capacity for fixing them when they emerge. The Maps Ap was not a huge deal, and fixable with a simple download, and otherwise the products are perfect. As for China labor unrest, well if it hurts APple it will hrut everyone else too, and again, Apple has the money to make a lot of those problems go away. Those people make $14 a day. If Apple gave them a 25% raise it woujld be a drop in the bucket.
    5 Oct 2012, 08:22 PM Reply Like
  •  
    conditioned response from an aapl lemming....keep averaging down

    where is your stop? oh thats right, bad trades become "investments"

    dump this thing while you still have a profit
    8 Oct 2012, 10:55 AM Reply Like
  •  
    This is one catalyst for my short position in the stock. For those who say it is a meaningless blip, buy the dip right here. Put some money behind your words.
    5 Oct 2012, 07:38 PM Reply Like
  •  
    I bought more today. So far, 651 is the hard support level. Acording to Najarian on CNBC who follows it closely. And the last time it had a fall to support, that was 570. Remember what happened then? I bought more at $572 and was richly rewarded despite a profits miss and a lot of naysayers and hand wringers. Why did I buy when everyone else was selling? first, because it's a great discount, second because I believe Apple's next few quarterly earnings reports will by far the biggest in world history.And remember, every time Apple gets a new customer, it usually keeps them for life. Like no other company in the world.
    Beautiful products at the Apple store today by the way, just luscious works of art. The $1600 desktop is the finest computer I have ever seen. It looks like it should be in a museum it's so beautiful.
    5 Oct 2012, 08:25 PM Reply Like
  •  
    I sell put $550 exp feb 2013 at $18.00 today
    5 Oct 2012, 11:52 PM Reply Like
  •  
    It's like a precious jewel.
    http://bit.ly/ST5TIE
    6 Oct 2012, 06:29 PM Reply Like
  •  
    I did research today at the local Apple store, had a long talk with a manager. The place was packed with customers at 10 in the morning, a line of 50 people waiting to pick up new iPhones. They have none in stock, but if you order and pay for one on line, you can usually pick up a reserved phone the next day, or shortly thereafter. It is all very organized. I asked him about longer delays. He told me that zero customers had complained about any wait, and that those who couldn't get a phone usually said they'd be back in a week or two when they had them in stock. Not a single customer, he said, got angry and said he was buying a samsung instead. Nobody. The place is buzzing with positive energy and though they have some 40 salespeople, every single one was busy. It took me awhile to find someone to ask my questions. I also asked him about supply shortages. He told me as far as he knew everything was flowing smoothly and on schedule. They never expected to have 50 million iPhones read the first month, logistically impossible. But every person who buys one will receive it soon. So WHERE IS THE BEEF? Yes, if a CHina plant stopped and no one else could pick up the pace, that would mean customers would have to wait longer, but Apple has more than enough money to make sure everything runs smoothly. And let's not forget, no other company in the world has this marvelous problem. Too much demand for its high-end full retail priced products. Any company in the world would kill for a "problem" like Apple's now, and this sell-off today is just another grand buying opportunity. Even if some iPhones don't get sold in october, they will be sold in November, so who cares? So long as Apple gets paid, and they will. The mone, growth and customer demand is secure. That is what investors should be focusing on.
    5 Oct 2012, 08:16 PM Reply Like
  •  
    I put money behind my words and continue to hold a large position. They will sell as many as they can make as fast as they can make them. 3,000 workers for a few days is nothing in the context of the armies who are employed. $100 Billion in the bank and growing every day. 50,000,000 iPhone5 to be sold and really doesn't matter if they are in the new Q or the one after. Not sure why anyone would short the stock. I can certainly see not buying it, but they are valued very conservatively and have huge annuity streams (iTunes, Apps) and top product refreshes. I might re-think if I see them move heavily into lower-margin items like actually selling large flat panel TV sets, but they are probably more interested in the TV "ecosystem" than the actual TV.

    Why would you go short and have to tie up so much collateral if you think the bubble will burst? Buy Puts out 6-12 months and wait.
    5 Oct 2012, 08:20 PM Reply Like
  •  
    Apple demands quite low defect ratios and penalizes companies for not reaching it with little to no solutions for it. Often companies will hide their defects to artificially push down the bad parts ratio. Failing to do this penalizes the company making it and apparently Foxconn workers know then they push the loss onto workers or blame them.
    5 Oct 2012, 08:52 PM Reply Like
  •  
    Apple is back in a consolidation phase. First you hold onto your core shares. Secondly, during this phase if your inclined to trade Apple you can swing trade this thing (at your own risk) in a range of 10 to 20 points or more until it blasts off again.
    6 Oct 2012, 12:15 AM Reply Like
  •  
    Isn't China on an 8 day National Day holiday? They will either be all off or not working at full capacity anyway.
    6 Oct 2012, 12:22 AM Reply Like
  •  
    Been looking at a 3 year weekly AAPL chart, and it's very clear every single pullback was a buying opportunity. But these retracements don't feel good when they happen, and can last for a while.
    The 424.88 to 361.77 pullback in 2011 (-14.85%), and the 641.25 to 519.95 pullback earlier this year (-18.92%) both took 6 weeks to complete.
    But both were subsequently followed by great rallies, from 361.77 to 641.25 (+77.25%), and from 519.95 to 705.07 (+35.60%). One step back, 2 (or more) steps forward...
    So far this "dip" from 705.07 to a low of 650.65 (-7.72%) has gone on for 3 weeks. I've added to my long position this week at 656.25, and will be doing so again soon - while shares are still on sale.
    APPL is in a very serious long term "friendly" Uptrend, and the fundamentals are great, so why should it suddenly stop and reverse at this point?
    6 Oct 2012, 08:27 AM Reply Like
  •  
    Agreed. I have been buying on Apple dips for years now, selling some on spikes, holding most of it. No Apple downdraft has lasted for more than a few weeks and we are already 2-3 weeks into this one. Then the updraft is much bigger than the downdraft was. So a clear upward bias.

    Remember, on August 1 or so, they "missed" their quarter and the stock went down to 570. I bought more there. Then it went to 705. I should have trimmed but didn't, knowing the stock is worth much more, but I am now sitting on $350,000 profit and so I bought again around 655 having heard on CNBC that 652 is supposed to be the new base support level, which if true means it is sitting on a new bottom now. And it likely to explode to the upside whenever there is compelling good news.

    And that good news will come. My research at the local Apple store confirms overwhelming demand and only minor delays in delivery. This is happening all over the world now. And since when are more customers than you need a problem? Though many customers will have to wait for delivery, they are still pre-buying, in order words Apple gets paid upfront. The Apple store manager told me that their plan for Christmas is to sell confirmed buy vouchers. Since the customers have to come in and activate their phones anyway, there will be a long and orderly process of pickups and activations lasting well into the new year from the Xmas season. That way, Apple can maybe sell 100 million units over 4 months rather than doing the impossible, producing 100 million units in a flash. This is just reality for the biggest product roll-out in history, and ditto the mini Ipad. So by February of next year the two roll-outs will be completed and Apple will be sitting on a mountain of profits, complete with powerful growth and millions of loyal new customers. So here we are at PE 15, a low multiple, and people are poo-pooing the stock. They are short-sighted fools. Yes there are speed bumps, but Apple deserves to be well over $800 or $900 and probably will be there. In which case one will look back at today and kick oneself for not loading up at 655 or so.
    6 Oct 2012, 02:00 PM Reply Like
  •  
    trading <640 today...now what?
    8 Oct 2012, 11:13 AM Reply Like
  •  
    trading <640 today...now what?

    Pile in and wait for January. Seriously. Come back in January and see how that move would play out.
    8 Oct 2012, 12:56 PM Reply Like
  •  
    stop loss = ?
    8 Oct 2012, 01:00 PM Reply Like
  •  
    I don't believe in stop losses. They are just a way to get shaken out of a good stock by volatility. If you bought today and rode the ups and downs, I am betting you that come Jan 21 you'd be well ahead of your entry point.

    Feel free to return on Jan 21 and let me know if I was wrong.
    8 Oct 2012, 03:04 PM Reply Like
  •  
    ahh, i see...you let bad trades turn into "investments". enjoy the game while you last
    8 Oct 2012, 03:18 PM Reply Like
  •  
    No I don't let bad trades turn into investments. I don't buy a stock with the mistaken notion that it has to go straight up. Using a stop loss is great if you lack conviction and don't want to get stuck with something you never wanted. But if I buy a stock I am prepared to ride out a bit of a dip in order to see what happens. I am long NOK right now, and I would not dream of bailing on a 10% pullback because the idea is that it may do quite well once the dust settles, but there may be some dust in the meantime. AAPL has a long history of pullbacks after new highs. Unless you are lucky enough to time the very bottom, it may decline after you buy it. Refusing to stick around for payday is a sure way to lose.

    As a case study of what I am describing, I offered that we wait and see where AAPL is at in January. Three months seems a reasonable amount of time to see how earnings compare to rumors and noise.
    8 Oct 2012, 05:35 PM Reply Like
  •  
    CHINA LABOR WATCH is a Maoist group funded by Wall Street SOCIALISTS like Soros.
    6 Oct 2012, 12:09 PM Reply Like
  •  
    How can a mega capitalist like Soros also be a socialist. That's like saying Hugh Hefner is gay. Just because Soros is honest and doesn't buy into the trickle down all benefits to the richest people, doesn't make him a socialist. And remember, the US is the least socialist of any developed country, and countries li;ke Canada which is very socialist is doing much better than we are. So grow a brain and stop buying the rightwing spin. It's all a pack of lies, as you can see with Romney's debate performance. Just lying and flipflopping away to cover up his real intentions, which will not benefit you or me or anyone but a select few country club types at the very top.
    6 Oct 2012, 01:51 PM Reply Like
  •  
    For those victims of brainwashing, they want to BELIEVE lies.
    The truth is out there.
    You do not need to grow a new brain.
    (do you know how?)
    Go get a job from Soros.
    Then you can change the world!
    8 Oct 2012, 12:27 PM Reply Like
  •  
    My research reveals that what is happening is simply pressure on two fronts, trying to keep up with amazing demand for the iPhone (a great thing for any company to have to worry about) and the Steve Jobs type perfectionism of Apple, that is forcing these workers and control specialists to be extra-extra careful. Which pushes them to the brink and sometimes a few of their heads explode and they need a break. Foxxconn is bringing in more people and already paying 300% the normal salary for overtime and vacation work. So the good news is that these pressure explosions are not very costly and do not slow thiungs down much. But the real reason for them is the very same reason buyers want Apples, because they are near perfect products. And that doesn't come easy.

    Relatedly, I spoke to my local Verizon store repairman recently and he told me though Blackberry and Android phones regularly come back for fixes or returns, (my Android is always malfunctioning) not a single Apple iPhone had come back all year. Amazing but true. And now we can see the reasons why. Perfectionism a la Steve Jobs = big pressure on employees. In fact many employees considered Steve a total A-hole the way he prersured them to be perfect. Which bottomline means if you want near-perfection youhave to pay a little more and maybe wait a little longer for your delivery. The line of customers waiting for their Apples is long in every store. The demand is amazing. The profits will be even more amazing. Soon. So dont buy the shorts and worry-warts, instead, buy here as 651 is becoming a base with strong support. Of course, we also hope labor unrest doesn't get worse. Hopefully Foxxconn and Apple are taking quick measures to deal with it. In fact I am sure they are.
    6 Oct 2012, 12:36 PM Reply Like
  •  
    I heard also from a Verizon rep that Android customers co
    sometimes come in for brain-defect repair.
    6 Oct 2012, 03:40 PM Reply Like
  •  
    Remain calm, as is well.

    The strike never occurred, according to Chinese government officials.

    It would seem that Apple's pullback was for no reason, right?
    6 Oct 2012, 04:13 PM Reply Like
  •  
    Yawn.....Wake me up for earnings.ZZZZZZ...zzzz...
    6 Oct 2012, 06:11 PM Reply Like
  •  
    For the price of the product I think Apple could hire union workers in the United States.
    6 Oct 2012, 06:11 PM Reply Like
  •  
    3-4 thousand workers on strike and this is news? Apple probably has close to a million employees in their manufacturing/distribu... process.
    6 Oct 2012, 07:17 PM Reply Like
  •  
    This is a perfect storm for going long on AAPL. Commenters about Chinese labor need to study China's job markets and the grossly poor population of rural areas where these workers come from to work. Actually talk to someone from China. The product is technically superior according to the technical reviews and will continue to blow away the competition. The phone has blown me away with my first week of ownership.

    Long AAPL and going longer! This stock price has the company at very low benchmark financial marks.
    6 Oct 2012, 07:18 PM Reply Like
  •  
    losers average losers
    8 Oct 2012, 01:16 PM Reply Like
  •  
    I just started buying Apple calls two weeks ago. I have already sold my calls and made some good gains. I think that in this market the best thing to do is to DAY TRADE, even APPLE!
    7 Oct 2012, 01:17 AM Reply Like
  •  
    bought calls 2 weeks ago and MADE money? liar
    8 Oct 2012, 01:17 PM Reply Like
  •  
    Apple has no significant supply shortage problems. How do we know? Well, they are advertising heavily on Sunday football. If they couldn't meet the demand, they wouldn't be trying to amp up demand. Apple doesn't even need to advertise really, so when it does, you know they have thought it out and they kn ow they can satisfy any present demand. You may have to wait 1-14 days for your phone, but it will be delivered if you go to their website and order one. The local Apple store manager explained this to me. right now, he said, the wait is 1-2 days. Even if it becomes 1-3 weeks, he told me not a single customer has walked out angrily. Every one will buy an Apple phone later when there is no wait. and by later I mean later this month. So, Apple has lost nothing and all this fear and smear about inability to supply demand is making a mountain out of a molehill. By February, Apple should successfully complete the two biggest double product roll-outs in corporate history, and the earnings should be jaw-dropping. That is why anyone who shorts, doesn't buy in dramatic dips, sells instead, or even daytrades (what daytrader could possibly know what will happen next?) is short-sighted and foolhardy. The only strategy which makes sense now is to go long and at least wait until January blow-out earnings. Apple has become the biggest corp in the world because it is making more moey than anyone by far. They blow away Exxon, Google, IBM, you name it. Nobody else comes close and we are headed into the peak season for earnings in Apple history. So why would anyone sell here? same reason they sold after Job's death. Fear, weak handedness and failing to understand Apple's growing global dominance and incredible brand loyalty and profitability. I am telling you now, do not sell until at last 790 or you will be sorry, and that is 130 points up front here.
    7 Oct 2012, 10:29 PM Reply Like
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