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Foxconn's Profits Slide 31% as iPhone Sales Continue to Drop

Following in line with a slump in iPhone sales, Apple manufacturer Foxconn recently reported a 31 percent decline in profits in the second quarter of 2016. For the full quarter, ending in June, Foxconn was said to have amassed a net profit of 17.7 billion New Taiwan dollars, down from NT$25.7 billion a year earlier. Analysts watching the company had expected a revenue of around NT$23.9 billion for the quarter (via The Wall Street Journal).

A doom and gloom sentiment began surrounding Apple, and its overseas manufacturers, soon after the Cupertino-based company reported its first quarterly sales decline since 2003 in April. Despite a strong presence of the iPhone SE in the market, iPhone sales continued to contribute to an overall revenue decline for the company as the year continued.

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The slump in the iPhone market now appears to be fully affecting Apple's manufacturing partners with the news out of Foxconn today, but both companies are looking forward to an uptick in sales in the future. Notably, Foxconn's acquisition of Japanese electronics maker Sharp has been officially approved by Chinese antitrust authorities, "clearing the final hurdle" in the lengthy buyout process. With the acquisition over, it should be easier for Foxconn to move forward with not only manufacturing of parts for the iPhone 7, but potentially even ramping up development of AMOLED displays and glass casings for the 2017 iPhone.

Overall, weak demand for the iPhone 7 -- due to a "lack of innovation" -- was predicted by a group of Apple suppliers in May. Multiple companies, like Japan Display and Taiwanese Semiconductor Manufacturing Company, reported fears of both huge net profit declines and a worrisome decrease in chip orders thanks to an overall declining iPhone market. Still, Apple CEO Tim Cook is optimistic about iPhone sales moving forward, saying that he sees "so many signs that are positive" as the company moves towards the iPhone 7 and iOS 10 in the fall.

Related Roundup: iPhone 7
Tag: Foxconn


Top Rated Comments

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40 months ago
"so many signs that are positive ('https://www.macrumors.com/2016/07/26/tim-cook-optimistic-iphone-7-sales/')"

Must be interesting to live in a world with Cook tinted glasses.
Rating: 44 Votes
40 months ago
I wonder if the slump isn't just about a "lack of innovation" but maybe more, or at least partly, due to market saturation. So many people have iPhone's now and other smartphones that eventually sales would slow down at some point.

This whole "doom and gloom" sentiment seems silly to me at this point. The companies are still making money hand over fist here and they're not even close to going under or anything like that.
Rating: 28 Votes
40 months ago
The prices guys, the prices.

This is the begin of the end if Apple can't compete with Nexus cheaper models. I mean, why a new buyer should pay 600+$ instead of half the price for a 5X? And the 5X is not a bad smartphone at all. It's super good indeed!
I don't want to start realizing that there's no reality in the shareholders eyes. In this world Android is becoming more tough to beat, the iPhone cannot stand only on his name and on Steve's heritage. Ok Swift, ok good design, ok Apple, wow amazing! YOLO: but the troubles are emerging now more than ever.
Rating: 26 Votes
40 months ago
I hope Apple is not blaming Foxconn or their employees for this decline, the blame falls squarely in the head of Apple's CEO, Tim Cook.
They need new leadership that's interested in innovating again instead of promoting social policies as their top priority.
Rating: 20 Votes
40 months ago

So they'll sell it as the music lover's iPhone: stereo speakers, 'digital quality' Lightning earphones / wireless earphones and the new Music app.


Bluetooth earpods are very much the opposite of the music lover's wishes. If there is one category they will NOT be able to sell the iPhone 7 to , it's precisely the music lover. They all have invested in expensive quality headphones and they all now need to carry at all times a dangling fragile adapter.

Also, there is no such thing as a "digital quality" earphones. Our ears are analog and all digital information has to be converted into analog before reaching the earphones.
Rating: 15 Votes
40 months ago
After reading all the rumors about the new iPhone I really don't even know how thy are going to advertise it.

No headphone jack is a huge no go for many people I have talked to, myself included.

And the rumors also point to most other things staying virtually the same.
The 6S is already blazing fast so a faster processor is unlikely to convince anyone to go out and upgrade their phone either.

wht is their strategy for the new phone? Only people with yearly free upgrade plans and expiring contracts?

What am I missing?
Rating: 11 Votes
40 months ago
The market is saturated. Without significant innovation nobody will upgrade just to have the latest model. I'm happy with my iPhone 6 and won't upgrade till it really makes a difference.
Rating: 11 Votes
40 months ago
It's worth noting that Apple isn't Foxconn's only customer, they do in fact assemble electronic devices for many other large tech companies.

And I wish people wouldn't keep banging on about a sales decline. Compared to a normal year, such as the iPhone 5S, the iPhone 6S sales are up. Last year was an anomaly and it will happen again if rumours about next year's iPhone are anything to go by. Everyone will rush out in 2017 and buy the latest iPhone and in 2018-2019 I can see the Apple is doomed, sales are down nonsense again. It's just the nature of the beast, we've been here before and it'll happen again.
Rating: 11 Votes
40 months ago

I wonder if the slump isn't just about a "lack of innovation" but maybe more, or at least partly, due to market saturation. So many people have iPhone's now and other smartphones that eventually sales would slow down at some point.

This whole "doom and gloom" sentiment seems silly to me at this point. The companies are still making money hand over fist here and they're not even close to going under or anything like that.

It's certainly not saturation. Loads of potential customers are ready to move to the iPhone. They just can't enter because the price is too high for the technology they want to buy. Innovation seems to be some kind of sticking point as well. iPhone in some quarters is perceived these days as being less advanced than competitors.

Think back to 2007, iPhone was 5 years ahead of the competition. iPhone was the best, iPhone was fresh, iPhone was sexy. Today, competitors have caught up, Apple has languished and not made the next big thing and instead is playing catch up with competitors.

The company is still making money, BUT, this has similar overtones to the Apple of the 1990's, the OS was languishing behind the competition, and Apple allowed competitors to catch up.
Rating: 10 Votes
40 months ago



And I wish people wouldn't keep banging on about a sales decline.

Reality is hard for many to face.
Rating: 9 Votes

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