|
 Reports of slowing shipments and mounting inventories of the iPhone
6S and 6S Plus, as well as tepid forecasts from suppliers, have
pushed Apple investors into unfamiliar territory after years of
booming sales and surging shares.
Earlier on Wednesday, Japanese daily Nikkei, citing parts suppliers,
said output of the models would be cut by about 30 percent in
January-March so dealers could unload stock. Apple shares lost 2.5
percent, and those of suppliers similarly fell. (http://s.nikkei.com/1R9rxvj)
"Chinese New Year is a big holiday and there is usually overtime for
workers. But this year Foxconn will have a normal break," the person
said, referring to the Lunar New Year which falls on Feb. 8.
Taiwan-based Foxconn, formally known as Hon Hai Precision Industry
Co Ltd, assembles the latest iPhones at factories in China where it
employs hundreds of thousands of people, and offers incentives such
as triple overtime pay over China's biggest holiday.
Foxconn declined to comment. Apple was unavailable to comment. The
person with knowledge of the matter was not authorized to speak with
media so declined to be identified.
GOVERNMENT SUBSIDIES
The first quarter is usually a quieter time for suppliers and the
most obvious period to cut production, adjusting for extra supply
brought on for the holiday season at the end of the calendar year.
But suppliers pointed to Foxconn's unusual Lunar New Year and slower
sales as evidence of a gloomy outlook, as well as 82 million yuan
($12.53 million) in subsidies that the government of Zhengzhou,
Henan province, awarded Foxconn companies this week to limit any
layoffs.
"We were already conservative about the first quarter," said analyst
Kylie Huang at Daiwa-Cathay Capital Markets in Taipei, in response
to Foxconn's Lunar New Year plans. "It's not just iPhone slowdown,
but all of the Chinese economy."
China is a key growth market for Apple and the world's biggest
smartphone market.
Shares of Apple suppliers fell on Wednesday, with Foxconn closing
down 0.1 percent after trading during the day at lows not seen in
over four months.
[to top of second column] |
Shares fell between 2 percent and 6 percent at fellow assembler
Pegatron Corp, Taiwan Semiconductor Manufacturing Co Ltd, LG Display
Co Ltd, Japan Display Inc, Murata Manufacturing Co Ltd, Alps
Electric Co Ltd and TDK Corp.
BRACING FOR A CUT
Lukewarm forecasts in December from suppliers such as Dialog
Semiconductor GmbH and casing maker Jabil Circuit Inc stoked fears
that iPhone shipments could fall for the first time. But analysts
questioned the extent of any slowdown.
"Apple has been gaining significant market share in pretty much
every region, and I'm not seeing a global slowdown," said analyst
Patrick Moorhead at Moor Insights & Strategy.
Nevertheless, many are bracing for a production cut. Since early
December, about a third of analysts tracked by Thomson Reuters have
trimmed estimates on Apple.
On average, they expect Apple to increase revenue this year by less
than 4 percent, a far cry from the 28 percent achieved in the
business year that ended in September.
Meanwhile, in contrast to Apple woes, Huawei Technologies Co Ltd [HWT.UL]
on Wednesday said it had become the first Chinese handset vendor to
ship more than 100 million smartphones a year.
(Reporting by Anya George Tharakan and Lehar Maan in BENGALURU,
Yimou Lee in HONG KONG, Ritsuko Ando in TOKYO, Julia Love in LAS
VEGAS; Editing by Steve Coates Christopher Cushing)
[© 2016 Thomson Reuters. All rights
reserved.] Copyright 2016 Reuters. All rights reserved. This material may not be published,
broadcast, rewritten or redistributed.
 |
