Foxconn Sales Decline Due To iPhone Slump
Taiwanese manufacturer Foxconn’s fortune is very much tied to Apple. After all, Foxconn makes 50% of its revenue from Apple. Hence when iPhone shipments declined to 207 million units for 2016 compared to 236 million shipments in 2015 [also its first revenue decline since 2001], it comes as no surprise that Foxconn too would have to meet with a similar fate. Formally known as Hon Hai Precision Industry, Foxconn recently reported its first sales decline since the company went public in 1991. It reported revenues of $136.38 billion US, a decline of 2.81% from a year ago.
As for Apple, 2016 had been a tough year overall, with Apple posting negative financial performance, but also CEO Tim Cook getting a pay cut due to the company missing its annual sales targets by just over 3%.
The lowering of demand for the smartphone directly impacted the company’s manufacturing partners, especially that in total 207 million iPhones were shipped in 2016, down from 236 million in 2015, analyst Vincent Chen said.
Apple has also been critisized for its lack of attractive features for the iPhone 7 — a key reason why many Galaxy Note7 owners decided bot to switch even after the Galaxy Note7 crisis. Analysts even criticized Apple for failing to capture new customers into its ecosystem from the churning Note7 user base.
However, experts believe 2017 to be a better year for Foxconn, as Chen suggested that its revenue could grow by 5% to 10%. “For 2017, iPhone’s shipment could rise to some 221 million,” said Chen, adding that the growth drivers for the current year will come from demand for the next iPhone 8 and a mild rebound in the PC market. Foxconn is also the world’s biggest desktop assembler and can expect better returns in this area too.
Last year, Foxconn acquired Sharp for display technologies, as the company looks to leverage that advanced display tech from Sharp to win more orders from Apple. Foxconn is also reportedly working to build its own smartphone brand that would be launch over the next quarters. All this should be a wake up call for Apple and it should start to Act if it’s willing to dominate the smartphone and other smart devices.
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