iTWire - iPhone maker Foxconn warns of slowing sales this year
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Monday, 21 August 2023 08:21
iPhone maker Foxconn warns of slowing sales this year Featured
By Sam Varghese
Taiwanese contract manufacturer Foxconn Technology Group has warned that it expects a drop in sales both during the current quarter and for the whole year.
The company, whose real name is Hon Hai Precision Industry, is the biggest maker of iPhones and made the comments as part of its second-quarter results announcement last Monday, the South China Morning Post reported.
In a statement, the company said: "Operating performance in the third quarter should warm up and show a trend of on-quarter growth. However, considering many external variables, in response to uncertainties such as global monetary tightening, geopolitical tensions, and inflation, the full-year outlook is now expected to slightly decline, from previous flattish expectations."
The smartphone industry as a whole has reported decreases in shipments for the year, with the technology analyst firm Counterpoint Research firm warning on Friday that 2023 shipments were likely to be the worst for a decade.
Indications that Apple's sales would be sluggish this year came at the beginning of the month when the US company reported a fall in its quarterly revenue, the third consecutive quarter of decreases.
Revenue from key products like the iPhone, Mac and iPad all showed a downward trend, but the company increased its revenue in China and Europe.
Apple is reported to have asked its suppliers to manufacture about 85 million iPhones this year, roughly about the same as in 2022.
The SCMP cited Steven Tseng, an analyst at Bloomberg Intelligence, as saying Foxconn's revenue could be affected by muted iPhone growth in 2023 and potential margin pressure due to residual lockdown impact, less-favourable economies of scale, and capacity relocations.
Analysts are expecting the iPhone 15 launch next month to bolster the market, with expectations that it could become the top-selling brand for the first time.
Jeff Fieldhack, Counterpoint's research director for North America, said: "...we’re watching 4Q with interest because the iPhone 15 launch is a window for carriers to steal high-value customers. And with that big iPhone 12 installed base up for grabs, promos are going to be aggressive, leaving Apple in a good spot.”
Counterpoint's China associate director Ethan Qi added: "Apple is well-positioned as the premium segment continues to gain more share.”
Fieldhack agreed, saying: "It’s the closest Apple’s been to the top spot. We’re talking about a spread that’s literally a few days’ worth of sales.
“Assuming Apple doesn’t run into production problems like it did last year, it’s really a toss-up at this point.”
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