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Key Apple supplier Foxconn slows down its hiring

The manufacturer tells CNET it has slowed down its hiring due to a high rate of employee return after the Chinese New Year. The Financial Times says Foxconn has actually frozen recruitment due to slowing demand for the iPhone 5.


Apple supplier Foxconn said it is temporarily slowing down recruitment in its factories in China. The move comes amid questions about the enduring demand for the iPhone 5.

A Foxconn representative said in an e-mailed statement to CNET that the decision was "due to an unprecedented rate of return of employees following the Chinese New Year holiday compared to years past."

However, the Financial Times reported a more drastic move -- a hiring freeze -- and attributed it to fewer orders for the iPhone 5.

Foxconn denied that the move was related to any single customer and added that "any speculation to the contrary is false and inaccurate."

The Financial Times noted that it was the first time since a 2009 downturn that the company opted to halt hiring in all of its facilities across the country. The publication talked to multiple recruiters.

The actions taken by Foxconn fuel the concern over the perceived weakened demand for the iPhone 5 and slumping sentiment around Apple in general, with production activity a leading indicator of interest in the product.

The story, however, also comes after Apple's iPhone 5 was crowned the top-selling smartphone worldwide in the fourth quarter, according to Strategy Analytics. In fact, the iPhone 4S came in second, beating Samsung Electronics' Galaxy S3.

CNET contacted Apple for comment, and we'll update the story when the company responds.

Foxconn's hiring freeze is in effect until the end of March, according to the FT. Facilities in Shenzhen, Zhengzhou, Taiyuan, and Chengdu, which produce iPhones, iPads, or both, have stopped hiring, FT reported.

Apple shares fell 1.9 percent to $451.29 on the report. RBC Capital analyst Amit Daryanani, however, believes that the Chinese New Year may be a more logical explanation for the hiring slowdown than any sudden downturn in demand.

Apple is rumored to be releasing a new version of its iPhone, likely called the iPhone 5S, in the summer, accelerating its product release schedule. The company faces continued pressure from a relentless wave of new flagship smartphones, including the HTC One unveiled yesterday.

Updated at 9:38 a.m. PT: to include an analyst comment.