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February 20, 2013

No Vacancy: Foxconn Halts Hiring, Dials Down iPhone 5 Production

By Steve Anderson, Contributing TMCnet Writer

A new report emerged earlier today that runs counter-intuitive to pretty much everything we know about Apple devices. Not only has iPhone (News - Alert)-making powerhouse Foxconn put a complete halt to hiring, but it has also slashed production of iPhone 5 devices.

On both fronts, this is unusual, prompting widespread speculation as to just what's behind the retraction of Foxconn.

The word about Foxconn's retooling came from the Financial Times (News - Alert), and it sparked plenty of discussion in its wake. Some believe the reason behind the slowing down is that Apple is looking to tool up for another iPhone launch, some reports pegging the upcoming launch of the iPhone 5S and potentially the iPhone 6 would provide a little extra credence to that thought.

But there are other, darker potential motives at work here. One is dark only for Foxconn, as it's entirely possible that Apple (News - Alert), fed up with various public relations debacles, is looking to pull the plug on production at Foxconn, and instead pursue a whole new producer.

A second possibility is dark for Foxconn and Apple alike, as it may be that the iPhone line is losing steam in general, with a saturated marketplace making it harder overall to sell phones.

While this is a bit dire, especially given the sales that the iPhone 5 posted in the fourth quarter of 2012 – not to mention the final days of the third quarter – it's not outside the realm of possibility.

A weak global economy is still weighing on many consumer buying decisions, and a new smartphone every year may just not be in the budget for an increasingly large number of buyers. But there's another distinct possibility that some are advancing, and that's that the hiring freeze and the iPhone slowdown are only tangentially related, if anything. While it's possible that Apple's noticing a slowdown in sales following an impressive fourth quarter of 2012, and reacting accordingly, Foxconn may be decelerating its own hiring, sensing that a general slowdown – nothing as dire as complete loss of product line but a slowdown nonetheless – is in the works, and is simply reacting accordingly by not laying anyone off, but not bringing on more workers.

Some have even projected an increase in industrial robotics as driving a bit of a slowdown in hiring, and industrial robots have certainly been on a bit of an uptick in recent years.

There are plenty of possibilities out there. While it's unknown just which one – or which combination – is working to reduce production at Foxconn, the facts remain that iPhone 5 production is slowing, and Foxconn isn't taking any more resumes.

Only time will truly tell just what the cause most likely was – especially if the word about the iPhone 5S and iPhone 6 proceeds into a larger growth pattern – so it's going to bear close examining through the near-term future to find out just what monkey wrench got thrown into the Foxconn works.

Edited by Braden Becker
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