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Foxconn reportedly hiring 100,000 new workers for iPhone 6
So here’s your not-news news: Apple parts suppliers in China are gearing up to start mass producing the next iPhone, because obvs. It’s June. Next month is July. And then in a couple of months, it’ll be September. Boom—iPhone time. But here’s where it gets interesting: Foxconn is reportedly hiring a record number of new employees to start working on the phone, according to Taiwanese Economic Daily.
Foxconn, Pegatron, and Hon Hai are all hiring, but Foxconn is said to be hiring as many as 100,000 new workers. Foxconn is also reportedly responsible for producing 70% of iPhone 6 units.
Apple’s iPhone parts suppliers always ramp up hiring ahead of a new product release, but if the numbers are true, Foxconn’s mass hiring would be the largest in iPhone history. All of the parts suppliers together amount to the continent’s largest jobs recruitment effort, according to the Economic Daily. Pegatron is said to be increasing its worker base by 3%.
Obviously, there could be a number of reasons why Foxconn and others would go on a mass hiring spree in preparation for the new iPhone 6. Could be that there has been a mass exodus of factory workers over the last year as groups like China Labor Watch have highlighted human rights violations. But the more likely reason is that Apple is expecting some big ass sales.
Apple is reportedly making two versions of the iPhone 6, one with a 4.7-inch screen and one with a 5.5-inch screen. A number of analyst firms believe that a larger iPhone will draw more Samsung/Android users who may be considering a switch but have grown accustomed to their larger screens. (A friend of mine was just at my house the other day with her new LG, and that thing was huge! You can see like, all your texts!)
Analyst group ISI said back in April that the release of two new, larger iPhones would catalyze “the mother lode of all Apple upgrade cycles.” The group estimates that Apple currently has 260 million installed iPhone users, with over half of iPhone sales today going to upgrades. ISI believes that the arrival of new larger iPhones could boost EPS by 10-15% in the second half of 2014.
Bad news: a larger iPhone is likely going to cost more. Toni Sacconaghi of Bernstein Research estimates that a full 25% of the iPhone’s bill of materials is determined by the size of its screen. Thus, if a 4.7-inch screen has a screen size that is roughly 30% larger than Apple’s previous iPhone models, that could put significant pressure on Apple’s gross margins. Sacconaghi and team estimate that a 4.7-inch screen alone could negatively impact Apple’s EPS by as much as 10%.
In order to avoid losses, Apple would have to sell an additional 20 million iPhones—which might actually happen.
So now we all just have to sit around and wait for September to roll around…
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