Friday , December 4 2020

IPhone's larger assembler will consider a great reduction in costs

The Foxconn Technology Group, Apple's largest iPhone assembler, aims to cut costs by 20 billion yuan ($ 2,900 million) by 2019 as it faces a company's "very difficult and competitive year" .

IPhone businesses will have to cut costs by 6 billion yuan next year and the company plans to release approximately 10% of non-technical staff, according to the Bloomberg memo. The cost of the company over the past 12 months is approximately 206,000 million yuan ($ 6,700 million). Foxconn declined to comment.

Probably Foxconn's measures will increase the pessimism that surrounds Apple and its iPhone entrants, its most important product. Just last week, four suppliers on three continents cut their earnings due to weak demand. This has led to a decline in the stock of technology that has expanded in the past few days to the market as a whole.

Goldman Sachs lowered its price for Apple for the third time this month due to weak iPhone demand in China and other emerging markets. Analyst Rod Hall warned of the "real risk" of forecasts if current trends continue.

Apple fell on the territory of the country on Tuesday and closed more than 20% under the peak of October. Last week, Lumentum Holdings Inc., one of the low-priced suppliers, dropped 33 percent, while AMS AG fell 22 percent. This week, after the concern spread, the S & P 500 wiped out its profit for 2018.

Foxconn, based in Taipei, collects everything from iPhone phones and laptops to Sony's PlayStation. in factories in China and around the world. Foxconn is affected by the slowdown in the smartphone market, while US trade strain increases global uncertainty. Earlier this month his leading company, Hon Hai Precision Industry Co., posted a 12% profit below expectations.

The company will make an in-depth review of managers with annual compensation exceeding $ 150,000, according to the Memorandum. Other cuts include a planned reduction in Foxconn Industrial Internet Co., whose subsidiary is included in Shanghai, of 3 billion yuan.

Apple is adjusting its strategy as the number of smartphones sold each year has declined. You can charge higher prices for each phone and get more money from services, including digital videos, streaming music, and data storage.

But most of their suppliers depend on larger units to grow their business and do not have a profitable support plan as industry growth is declining. This has led to financial warnings in companies such as Lumentum and Japan Display Inc.

"Suppliers depend more on the volume than Apple," said Woo Jin Ho, an analyst at Bloomberg Intelligence.

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