Fog Surrounds Apple As Biggest Partner Slashes Exposure & Shares Slump
The fog swirling around Apple has just thickened with a leaked document revealing that key partner Foxconn has been forced to initiate over $3 Billion in cuts.
The maker of Apple product such as iPhones and Mac PC’s joins a long list of suppliers who are reeling from a major downturn in demand for Apple products.
At this stage it’s not known whether Apple Australia will start making cuts to staff levels as consumers desert buying their iPhones.
Foxconn Technology Group said that the iPhone business will need to reduce expenses by 6 billion yuan next year and the company plans to eliminate about 10 percent of non-technical staff according to the memo obtained by Bloomberg.
“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, our global operations and the market and economic challenges of the next year or two,” Foxconn said in an emailed statement in response to Bloomberg queries.
Foxconn’s moves are likely to add to the gloom enveloping Apple and suppliers for the iPhone, its most important product. Just last week, four suppliers on three continents cut their revenue estimates because of weak demand. That set off a rout in technology stocks that has spread to the broader market in recent days.
Goldman Sachs cut its price target for Apple for the third time this month because of weak iPhone demand in China and other emerging markets. Analyst Rod Hall warned of “material risk” to guidance if the current trends continue.
Apple dropped into bear market territory last night closing more than 20 percent below its October peak. On a single day last week, Lumentum Holdings Inc., one of the suppliers that warned of soft demand, plunged 33 percent, while AMS AG tumbled 22 percent. This week, as concern spread, the S&P 500 erased its gain for 2018.