Fears of iPhone decline as Foxconn, other Apple suppliers slump

By on
Fears of iPhone decline as Foxconn, other Apple suppliers slump

Taiwan's Hon Hai Precision Industry Co, which trades as Foxconn and assembles the bulk of Apple Inc's latest smartphones, saw its December revenues slump by a fifth and full-year sales miss expectations.

The results, published on Friday, came amid growing concerns about slowing shipments of Apple's latest iPhone 6S models, which Hon Hai assembles.

Analysts said the results for Foxconn could be an indicator of demand for Apple's products in the first quarter of this year, but added that period was not normally a peak selling season and past iPhone cycles had followed a similar pattern, where an interim update on a model edition tends to see slower sales.

"The first quarter is an off season, a high base from last year and the global situation is not stable," said Leon Chu, investment manager at Franklin Templeton SinoAm Securities Investment Management in Taipei. "With all these factors, I'm going to be conservative."

Hon Hai, which goes by the trade name of Foxconn, reported December revenue of T$409.65 billion (A$17.6 billion), down just over 20 percent compared with both a year ago and November.

For 2015 as a whole, Hon Hai's revenue totalled T$4.48 trillion (A$193 billion), up 6.42 percent, but below analysts' expectations for an annual gain of 7 percent, according to the average of forecasts of Thomson Reuters Starmine.

Hon Hai's revenue in 2014 rose 6.53 percent.

Hon Hai said in a statement that December sales were as expected.

Samsung Electronics said on Friday its fourth-quarter operating profit likely rose 15 percent from a year earlier, missing expectations and fuelling concerns the tech industry may be in for a year of slack gadget sales.

Taiwan Semiconductor Manufacturing Co, the world's largest contract chipmaker, said on Friday its December sales fell both on the month and on the year. The annual growth in sales for 2015 more than halved from a rapid pace of 2014, when the new iPhone 6 models were first launched.

A person familiar with the matter told Reuters this week that Hon Hai planned to observe a normal Chinese New Year break for its factories on the mainland, in contrast to recent years when overtime prevailed to keep production lines cranking out goods through China's biggest holiday.

The mood for Taiwan's trade-reliant island economy is grim. Its exports plunged by more than expected in December for the 11th month in a row in data issued Friday, putting the full year 2015 decline at its worst annual rate since the global financial crisis.

Not only Taiwan

Two more Apple suppliers also flagged weak performance. US-based Cirrus Logic and Qorvo on Thursday added to growing worries about slowing shipments of iPhone 6S and 6S Plus by cutting their revenue estimates for the third quarter.

Qorvo's shares fell 12.4 percent in after-market trading, while Cirrus' stock slumped 9.5 percent before regaining some ground.

The downbeat estimates follow Japanese daily Nikkei's report on Tuesday that output of the latest iPhone models would be cut by about 30 percent in the January-March time frame so dealers could offload stock.

Qorvo cut its revenue estimate for the December quarter to about US$620 million from US$720 million-US$730 million, blaming weaker-than-expected demand for its radio-frequency chips used in mobile devices.

Analysts on average were expecting US$723.7 million, according to Thomson Reuters I/B/E/S.

Cirrus, which gets about three-quarters of its revenue from Apple, cut its revenue estimate to about US$347 million from US$370 million-US$400 million.

Analysts on average were expecting US$385.9 million for the third quarter ended December.

Cirrus, which makes audio chips for Apple, said the revenue cut reflected weaker-than-expected demand for certain portable audio products.

Shares of other Apple suppliers, including Skyworks Solutions and Avago Technologies, were also down. Apple shares were down 0.6 percent at US$95.87.

Apple suppliers' shares have taken a beating ever since reports about slowing iPhone 6S and 6S Plus demand surfaced towards the end of 2015.

Reporting by JR Wu and Anya George Tharakan.

Got a news tip for our journalists? Share it with us anonymously here.
Tags:

Most Read Articles

You must be a registered member of CRN to post a comment.
| Register

Poll

You have to spend $10k on new business hardware. What do you buy?
Collaboration hardware
Enormous monitors
New smartphones
New PCs
Minimum spec Mac Pro for $9,990.
We'd fake some paperwork and have a party instead
View poll archive

Log In

Username / Email:
Password:
  |  Forgot your password?