Iphone Factory ChinaSource: Apple

What you need to know

  • Apple's supply chain partners are experiencing falling demand.
  • The companies are reducing overtime and laying off temporary workers.
  • Apple's retail stores are beginning to reopen, which should help matters.

Apple's retail stores have been closed since March, and the company has experienced one of the worst sales quarters in recent history due to the effects of the coronavirus pandemic on the economy.

The drop in sales of Apple's products is apparently taking effect on its suppliers now, says a report from Financial Times. According to the report, supply chain partners responsible for manufacturing and assembling Apple products are reducing staff and cutting overtime hours.

While many factories in China were trying to ramp up production after its staff began to return to work when the country began to ease its social distancing restrictions, that initial boom in the hiring of workers has come to a halt. According to workers at Foxconn's Zhengzhou complex, the company has stopped hiring new workers and began to lay off some of the temporary employees it had brought in to ramp up production.

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The workers say that overtime has been cut so much that no one has worked overtime hours since April 10th and that Foxconn is encouraging employees to take a vacation.

A worker at Pegatron, an electronic manufacturing company in Taiwan, says that the company has laid off over a thousand temporary and third-party workers since the demand for Apple's products has fallen.

"The US orders are not coming, so why would we keep all the workers."

Thankfully, Apple has begun reopening its retail stores. Its stores in Greater China have been open for about a month already, and the company just reopened its first store in South Korea. While it is not clear when the rest of its stores will reopen, Apple says it will occur over time, with the company evaluating the local conditions for each location.