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9/24/2012
10:37 AM
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iPhone 5 Maker Shuts Plant Amid Labor Strife

Apple and contractor Foxconn are mum on whether facility's closure will impact production of iPhone 5, which is sold out across the country.

iPhone 5's 10 Best Features
iPhone 5's 10 Best Features
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A Chinese company that manufactures products for Apple, including the iPhone 5, said that it was forced to shutter one of its production facilities Monday after workers got into a melee with the plant's security guards.

Foxconn, which has drawn criticism in the past for harsh working conditions, did not say when it expects to reopen the facility, located in Taiyuan, about 320 miles southwest of Beijing. "The plant is closed today for investigation," a Foxconn spokesperson told Reuters.

Reports indicated that as many as 2,000 employees were involved in the brawl, the cause of which was not immediately clear.

Also uncertain is the impact that the plant's closure will have on production of the iPhone 5, which hit stores Friday. A company spokesperson did not immediately return a call seeking comment. In a statement, Apple said it sold more than 5 million of the devices over the weekend, but analysts were expecting the company to sell between 8 million and 10 million units.

The shortfall was due to the fact that Apple did not deliver enough phones to retailers to meet demand. As of early Monday, websites for retailers like Best Buy showed that the iPhone 5 was sold out across the country. Unlocked versions of the phone, meanwhile, were selling for $1,000 or more on eBay.

"Every single company that I talk to that is supplying Apple is running flat out," said CNBC market watcher Jim Cramer, on Monday's edition of Squawk Box.

[ What else does Apple have to worry about? See Apple iPhone 5: Opportunities And Threats. ]

Foxconn has in the past been hit with allegations that it forces employees to work long hours in poor conditions, with limited breaks and for low pay. It has also been stung by a rash of worker suicides that critics have said were directly linked to working conditions.

Shortly after he became Apple CEO in August, 2011, Tim Cook pledged to work with Foxconn to improve working conditions. But progress has been slow. As recently as last week, Foxconn was accused of manning its iPhone 5 production lines with interns from local vocational schools.

Apple isn't the only Foxconn customer that could suffer if the contractor is hit with ongoing labor problems. The company also makes hardware for Dell, Hewlett-Packard, Barnes & Noble, and Microsoft.

The iPhone 5, when it can be had, is available in white and silver, or black and slate. The contract price starts at $199 for the 16-GB model, $299 for 32 GB, and $399 for the 64-GB model. It's supported on the AT&T, Sprint, and Verizon Wireless networks.

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