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Foxconn cutting costs for 'difficult' year is a warning sign for Apple

Foxconn is the majority of iPhones – it's Apple's top manufacturing partner. So if it's slashing 20 billion yuan ($…

Foxconn is the majority of iPhones – it’s Apple’s top manufacturing partner.

So if it’s slashing 20 billion yuan ($ 2.9 billion) in expenses ahead of what an internal memo says, could be a very difficult and competitive year, “as Bloomberg reported on Wednesday, that could be another bad sign for iPhone demand.

Bloomberg’s report reflected a regular business planning process that the company goes through every year, Foxconn’s Louis Woo said in an email to Business Insider.

“We regularly review our global operations to ensure that we are always applying our resources in a way that supports our operations, our customers’ demands and critical research and development priorities while meeting the needs of all areas of our company. reviews enable us to meet our long-term responsibilities and commitments to our customers, our employees and business partners, and to our shareholders, “Foxconn Technology Group said in a statement.

“The review being carried out by our team this year is no different than similar exercises carried out in past years to ensure that we enter into each new year with teams and budgets that are aligned with the current and anticipated needs of our customers , onze globale operaties en de markt en economische uitdagingen van het volgende jaar of twee, “it continued.

Foxconn is not the only supplier to slash forecasts

U.S. President Donald Trump (C) takes part in a groundbreaking with Wisconsin Governor Scott Walker (L) and Foxconn Chairman Terry Gou during a visit to Foxconn’s new site in Mount Pleasant, Wisconsin. Reuters / Kevin Lamarque

But regardless of Whether Foxconn is going through a regular belt tightening period, the disclosure is sure to spark speculation after recent reports have pointed to a major slowdown in iPhone demand.

Before Foxconn’s warning and earning shortfall, several other suppliers of Apple to the iPhone had warned about orders being cut. Lumentum, Skyworks, and Qorvo all count Apple as a top customer and have slashed future estimates, each blaming the shortfall on order cuts from a major customer. The Wall Street Journal reported on Monday that Apple had cut production orders for all iPhone models, blaming weak demand.

Wall Street analysts are also worried iPhone unit sales will start shrinking in the short term. Disse bekymringene er trodde at være hvorfor Apple besluttet å stoppe rapporteringsenhedssalg, som analytikere påstod som en key metric. Apple said it preferred to focus on its transition to a service company, with regular recurring revenue.

Apple’s share price has declined by 20% and the company has lost over $ 265 billion in market value from its October peak.

Of course, Foxconn does not just manufacture Apple products. It is also the manufacturer for other computer and phone brands, as well as gadgets like Sony’s PlayStation and Nintendo’s Switch. Foxconn’s belt-tightening may simply reflect a cooling global market for premium electronics, instead of specific Apple weakness.

Foxconn is also spending billions on the construction of a factory in Wisconsin. Det er uklart om Foxconns kostnadsbesparelser kan påvirke den plante, hvilken president Donald Trump hedder en “utrolig investering.”

But regardless, all signs from companies that count Apple as a customer is now pointing to an impending slow period for sales and growth.

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