Foxconn is the contract manufacturer that Apple relies on the most to assemble the iPhone. As such, the company's fortunes are very much related to demand for Apple's smartphone, which has struggled this year for various reasons including pricing, a rise in Chinese nationalism, a perceived lack of innovation, sales bans in China and Germany, and stronger competition. The weak demand has forced Apple to cut iPhone orders.

According to a report from the Nikkei Asian Review (via Reuters), Foxconn is hunkering down during these tough times by laying off employees. Since October, the company has let 50,000 workers go from its Zhengzhou factory; this is the company's most important facility related to iPhone production.

The number of employees released isn't the big news here. After all, Foxconn lays off and hires this many workers every year on a seasonal basis. What is important to note is that the layoffs reportedly started in October. When iPhone sales were humming, Foxconn would continue to renew its employees contracts on a month-to-month basis from August to the end of January. And this problem is not confined to Foxconn. Apple's second largest iPhone manufacturer, Pegatron, started reducing its work force in November. Both assemblers reported lower revenue year-over-year for December, with Foxconn's gross declining 8.3%.

One person close to the assembler noted that Foxconn normally starts with a peak head count of 200,000 and reduces the number by tens of thousands of workers monthly until it is left with the minimum of 100,000 required to continue daily operations. This person notes, "And for [2018], it just happened sooner than in the past because of poor demand." Apple, which has never experienced the depth of weakness for this line before, has responded by offering a discount for those who trade in older iPhone models, and by cutting wholesale prices in China.

The entire iPhone supply chain has been impacted by the poor performance of the latest iPhone models. One company that supplies Apple with a key component for the device told 4,000 workers in Shenzhen to take a vacation from October to March. When they return on March 1st, the company will let them know whether they will be asked to return to work or let go.