Apple soured by riots and share slump

Apple has set a new sales record with its iPhone 5 but its triumph was overshadowed by analyst disappointment and riots at a Chinese factory that makes the device.

More than 5m handsets were sold in the first weekend they were available, more than any other Apple product has achieved on its debut. But the figure was still short of analyst predictions that it would sell as many as 10m, sending Apple shares down more than 2pc to $685.75 in morning trading in New York.

Meanwhile, armed paramilitary police were called in to quell a 2,000-man brawl at the Foxconn factory in Northern China at the weekend. About 40 people were taken to hospital during the riot, which started on Sunday evening as a dispute between a worker and one of the plant's 1,500 security guards spiralled out of control. Witnesses claimed that thousands of workers streaming off their shifts joined the fray. They began battling the security forces and each other amid fury over pay and working conditions. It took four hours for the police to bring the situation under control. Yesterday the 79,000-worker factory was shuttered and at least 35 police and paramilitary trucks remained outside.

The riot is the latest in a series of problems at Foxconn that have threatened to sour Apple's reputation. A succession of workers at its factories in Chengdu and Shenzhen committed or attempted suicide in 2010, raising fears over the working conditions. At one point, Foxconn began asking new members of staff to sign a contract promising that they would not kill themselves, although it has since abandoned this idea.

Since then it has boosted pay and reduced working hours. Demand for the iPhone 5 is so high that one Foxconn factory, in Zhengzhou, Henan province, had to recruit an additional 200,000 workers and turned to the local government for help.