iPhone sales have been falling and suppliers are taking a hit. Two of the major suppliers, are Foxconn and Japan ‘display.
Foxconn is a major Taiwanese multinational electronics contract manufacturing company trading under the name of Foxconn Technology Group and is headquartered in Tucheng, New Taipei, Taiwan. It was founded in 1974 under the name of Hon Hai Precision Industry Co., Ltd. Its products include electronics, electronic components, PCBs, PCB components, and computer chips. Its CEO is billionaire, Terry Gou.
Japan Display, was founded in April 2012 after the merger of Sony, Toshiba, and Hitachi’s LCD divisions in 2011 then the adding Panasonic in 2012. It focuses on development and produces and sells small- and medium-sized display devices and related products. Nobuhiro Higashiiriki is the CEO and President of the company.
As Apple’s iPhone and other smartphone sales continue to slow, Foxconn and Japan Displays are reporting disappointing financial results.
In the first quarter of 2019 Foxconn reported a dip in its sales by 17.7 percent down to $636.26 million while Japan display’s sales were down by 17.2 percent.
Japan Display says that much of their sales decline is due to customers switching to OLED screens rather than the longstanding LCD screens as well as users hanging onto their cellphones for longer than three to four years. It also reports that the decline in smartphone sales worldwide especially in China has had a major effect on their financial results.
One of the major reasons for the global slowdown in smartphone sales is due to the rise in price costs with customers hanging onto their old devices rather than shelling out $1000 or more for premium devices.
International Data Corporation (IDC) a research firm that provides intelligence, advice and events for the informations technology industry, says that 2018 was the worst year in the history of smartphone sales which fell to 4.1 percent in shipments.
With the trade wars going on between the US and China, prices won’t see a fore-seeable drop especially with the recent increase in tariffs to 25% being imposed by the US on Chinese goods which means, anything produced by Apple in China and shipped to the US will be hit with the tariff increase. JP Morgan, a leader in investment management, says that Apple will have to increase its prices on its iPhones by 14 percent in order to offset the cost in tariff increase or it may have to absorb the cost rather than passing it on to the consumer,.