Weak iPhone demand punishes Apple suppliers


iPhone 6 Plus
Apple isn't the only one suffering due to weak iPhone sales.
Photo: Ste Smith/Cult of Mac

Weak demand for the iPhone is causing earnings to fall for a number of suppliers in Asia, and few of them are hopeful that the situation is going to change.

Foxconn, the biggest assembly partner for the iPhone, saw its profit fall 9.2 percent last quarter, while Pegatron’s nosedived a whopping 35.1 percent.

Falling iPhone demand isn’t just a rumor anymore. During its last earnings call, Apple announced its first decline in revenue for 13 years as a result of weaker sales, and some analysts warn that this year’s iPhone upgrade won’t be exciting enough to change that.

Apple isn’t the only company that’s taking the hit, either. Both Foxconn and Pegatron, which assemble those iPhones and other Apple products, are seeing their revenues fall as orders dwindle — as are various component makers.

“We are all closely watching new areas, like the Internet of Things and automotive electronics,” said Charles Lin, chief financial officer at Pegatron. “But so far there is nothing nearly approaching the scale of smartphones.”

Sharp, which manufacturers displays for the iPad, posted an operating loss of ¥129.1 billion (US$1.19 billion) for its last fiscal year. The company made a profit of ¥500 million last year.

Japan Display, Sony, Largan Precision, and other manufacturers that build components for Apple are also seeing suffering, The Wall Street Journal reports.

This isn’t a problem that’s exclusive to Apple, though; plenty of other smartphone makers are struggling to grow as the market becomes saturated. After enjoying double-digit growth in recent years, smartphone sales are expected to increase just 5.7 percent in 2016.

The iPhone 7 series, which will arrive this fall, should provide Apple with a boost — but it’s unclear how long the excitement will last. Recent reports have suggested we’ll have to wait until next year for a truly substantial iPhone upgrade.


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