Apple set to cut up to 50% jobs in coming years – Here’s why

Apple, the tech behemoth known for revolutionising the smartphone industry, is now at the forefront of another significant shift—automation. The company is accelerating its efforts to automate the iPhone assembly line, a move that could potentially lead to massive job cuts for thousands of workers. 

According to a new report from The Information, Apple has directed its managers to reduce the workforce on final assembly lines by up to 50% over the next few years. This decision underscores a strategic pivot aimed at enhancing efficiency and reducing operational costs.

Apple’s decision to automate the iPhone assembly lines and the associated job cuts come in the wake of several factors, both internal and external. A significant impetus behind this move was the violent clashes between iPhone workers and police in China in 2022. 

These incidents not only highlighted the challenging working conditions within Apple’s supply chain but also brought global attention to the human costs of technology manufacturing. In response, Apple appears to be doubling down on automation to mitigate such risks and potentially improve working conditions by reducing the reliance on human labour.

However, the push towards automation is also driven by economic considerations. Automating the assembly process can significantly reduce costs in the long run, despite the high initial investments required. 

Apple had previously shelved similar projects due to the substantial upfront expenses. Yet, the recent push indicates a strategic shift in priorities, with the company now willing to invest heavily in machinery and technology that could streamline production and reduce labour costs over time. 

The cost of the machinery, estimated to be in the hundreds of millions of dollars annually, is seen as a worthwhile investment for long-term gains.

The impact of these automation efforts on Apple’s workforce is already becoming evident. According to an Apple Supply Chain report, there has been a noticeable decline in the number of workers at Apple’s manufacturing partners. 

The monitored workforce dropped from 1.6 million in 2022 to 1.4 million in 2023, primarily due to increased automation. This trend is expected to continue as Apple intensifies its automation initiatives.

The focus of Apple’s automation efforts is on the final assembly stage, a critical phase in the production process. Leading this charge is Peter Thompson, whose team has been working closely with major partners like Foxconn and Pegatron. 

These collaborations have already led to the automation of tasks such as installing brackets and circuit boards, resulting in the elimination of thousands of assembly line positions in China. This development marks a significant step towards a more automated production line, where machines perform tasks traditionally handled by human workers.

Apple’s automation drive is part of a broader trend in the tech industry, where companies are increasingly looking to technology to enhance efficiency and reduce costs. However, this trend also raises several critical questions and concerns.

The potential job cuts associated with automation could have far-reaching implications for the labour market, particularly in regions heavily dependent on manufacturing jobs. The shift towards automation could lead to significant economic and social disruptions, as large numbers of workers may find themselves displaced by machines.

Moreover, the move towards greater automation also highlights the ethical considerations associated with technology and its impact on employment. While automation can lead to increased efficiency and lower costs, it also poses challenges in terms of job displacement and the potential widening of economic inequality. 

Companies like Apple must navigate these challenges carefully, balancing the benefits of automation with the need to ensure fair and equitable treatment of workers.

Despite these challenges, Apple remains committed to its strategic vision of leveraging technology to drive efficiency and innovation. CEO Tim Cook has emphasised the importance of building a more flexible, efficient, and intelligent network. 

"We are making meaningful progress on our transformation, while strengthening our value proposition and improving the customer experience. I've never been more confident in our path ahead," Cook stated after the company’s third-quarter results.

This confidence is reflected in Apple’s financial strategies as well. The company recently authorized a $5 billion share buyback plan, with plans to repurchase $500 million in shares in the fourth quarter. 

This move is likely aimed at bolstering investor confidence and demonstrating Apple’s strong financial position, even as it navigates the challenges associated with automation and workforce reduction.

The market has responded positively to Apple’s strategic moves, with the company’s stock showing resilience despite the broader economic uncertainties. FedEx shares currently trade at $255.58, within a 52-week range of $224.64 to $291.27. Over the past year, FedEx stock has risen by 13% and is up 1% year-to-date in 2024. This performance indicates investor confidence in Apple’s long-term strategy and its ability to navigate the complexities of automation and workforce management.