Apple (NASDAQ:AAPL) shares slipped fractionally on Wednesday as video circulated on social media of hundreds of workers protesting at Foxconn’s main iPhone plant in China as COVID-19 regulations flared tensions.
The workers at Foxconn’s – also known as Hon Hai Precision (OTCPK:HNHPF) – plant in Zhengzhou, became frustrated after they complained they had not yet received the bonuses that were promised to them to stay working on iPhone production as the manufacturer works under a closed-loop system in an effort to limit the spread of COVID-19.
In the video footage, seen by Seeking Alpha but not independently verified, workers can be seen smashing windows, resulting in people in hazmat suits confronting them. Smoke is also visibly present in the video, but it is unclear if the smoke is related to tear gas grenades.
The escalation of violence at the plant marks a rare scene of dissent in China and furthers Foxconn as the center of attention as its Zhengzhou plant deals with pent-up frustration from workers.
In recent days, China lifted the lockdown in Zhengzhou as a result of rising COVID-19 cases, but the Foxconn plant is still under heavy restrictions.
Earlier this month, Foxconn said it would tweak production levels to prevent COVID-19 lockdowns at its Zhengzhou, China plant from negatively impacting holiday orders, but that it still expected smartphone revenue to decline this period.
On a recent earnings call, Foxconn Chairman Liu Young-way described Christmas and the Chinese Lunar New Year holidays as “very important,” according to Reuters, adding production would be worked out in time so as not to impact these events.
In the closed loop, workers live and work in a bubble and are isolated from the rest of the world. Many staff members have fled the area, but Foxconn has tried to circumvent that, offering bonuses to workers, while also working with the Chinese government to get to normal production levels, Liu explained.
In a statement obtained by Reuters, Foxconn said that it had made the payments and that it rumors of infected employees living with new recruits were “untrue.”
“Regarding any violence, the company will continue to communicate with employees and the government to prevent similar incidents from happening again,” a company spokesman told the news outlet.
Reuters added that production at the plant was not impacted by the protests and output remained “normal,” citing a source familiar with the matter.
We “now expect lower iPhone 14 Pro and iPhone 14 Pro Max shipments than we previously anticipated and customers will experience longer wait times to receive their new products,” the company said in a statement.
“COVID-19 restrictions have temporarily impacted the primary iPhone 14 Pro and iPhone 14 Pro Max assembly facility located in Zhengzhou, China,” Apple continued, adding that the facility was “operating at significantly reduced capacity.”
Apple (AAPL) did not immediately respond to a request for comment from Seeking Alpha.
Following the Apple (AAPL) statement, several investment firms, including Morgan Stanley and UBS, tweaked estimates on the tech giant, but Morgan Stanley said investors had an emerging opportunity to “buy the dip.”