Foxconn, the Chinese original equipment manufacturer that was embroiled in controversy about working conditions two years ago at its factory that manufacturered Apple iPods, is rumored to be reducing its electronics manufacturing staff without formally declaring the cuts.

Local media has reported that Foxconn may be suspending some employees without pay for up to four months.

In late October, Foxconn denied a rumor that it would cut 100,000 staff on the Chinese mainland and said that each of its factories was running normally. Later, a representative of Foxconn's media office also told local media that the company did not have any plans for cutting staff. However, many of Foxconn's employees said that the company had begun reducing staff in a disguised way by limiting employees' overtime and putting forward a plan for stopping paying of salaries but keeping the position open for some of the employees.

Taiwan's Commercial Times also reported that Terry Guo, president of Foxconn, had stated in a global management conference that Foxconn would probably reduce 10-15% of its staff before the end of 2008 if the global economy continues to worsen. Foxconn's media office later clarified report and said this might not be the case. Even so, the rumor rumbles on.

According to staff at Foxconn's Longhua Science & Technology Park in Shenzhen, the outsourcing department of the company will reduce its staff by 20%. The employees said that the company won't renew labor contracts for employees who had signed a six-month contract in July this year.

The establishment of Foxconn's Longhua Science & Technology Park has stimulated the house rental market and related businesses nearby. It is reported that even before Foxconn's employees leave, the landlords are beginning to worry about decreased income — as do the netcafe owners.