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Foxconn Reports First Ever Profit Decline on Back of Slow iPhone Sales in 2016
Following a year filled with doom and gloom stories surrounding Apple and its first revenue decline in thirteen years, major iPhone supplier Foxconn Technology Group has reported its own first ever sales decline since the company went public in 1991. In a report by Nikkei, "lukewarm demand" for the iPhone 7 and a "saturated smartphone market" are said to be to blame for Foxconn's downturn.
In total for 2016, Foxconn's revenue of 4.356 trillion New Taiwan dollars (approximately $136 billion) was down 2.8 percent from its 2015 earnings. As a slight bright spot, its revenue for December grew 9.8 percent year-on-year because of increased user spending for the approaching Chinese New Year holidays, "and the relatively robust demand for the 5.5 inch iPhone 7 Plus model."
Apple's overall revenue decline in 2016 also included the company's first year-over-year decline in iPhone sales -- the first ever dip in profit for the iPhone. The lowering of demand for the smartphone directly impacted the company's manufacturing partners, with analyst Vincent Chen reporting that in total 207 million iPhones were shipped in 2016, down from 236 million in 2015. That's even lower than what Nikkei predicted midway through last year -- believing shipments would total between 210 and 220 million.
There's expected to be a turn around this year, however, with Chen predicting Foxconn's revenue to grow between 5 and 10 percent on the back of "healthier demand" for the tenth-anniversary iPhone. Apple and its products account for more than 50 percent of Foxconn's revenue.
In total for 2016, Foxconn's revenue of 4.356 trillion New Taiwan dollars (approximately $136 billion) was down 2.8 percent from its 2015 earnings. As a slight bright spot, its revenue for December grew 9.8 percent year-on-year because of increased user spending for the approaching Chinese New Year holidays, "and the relatively robust demand for the 5.5 inch iPhone 7 Plus model."
Apple's overall revenue decline in 2016 also included the company's first year-over-year decline in iPhone sales -- the first ever dip in profit for the iPhone. The lowering of demand for the smartphone directly impacted the company's manufacturing partners, with analyst Vincent Chen reporting that in total 207 million iPhones were shipped in 2016, down from 236 million in 2015. That's even lower than what Nikkei predicted midway through last year -- believing shipments would total between 210 and 220 million.
There's expected to be a turn around this year, however, with Chen predicting Foxconn's revenue to grow between 5 and 10 percent on the back of "healthier demand" for the tenth-anniversary iPhone. Apple and its products account for more than 50 percent of Foxconn's revenue.
"Look forward to 2017, we think Foxconn's revenue could grow by 5% to 10%," said Chen. The growth drivers for the current year will come from healthier demand for the next iPhone 8 and a mild rebound in the PC market, according to Chen. Foxconn is also the world's biggest desktop assembler.A lack of "compelling" features for the iPhone 7 was said to be the main reason why many Galaxy Note7 owners decided to stay in the Samsung family when those devices began malfunctioning. After the events of the Samsung Galaxy Note7 crisis began subsiding, analysts criticized Apple for failing to capture new customers into its ecosystem from the churning Note7 user base.
For 2017, iPhone's shipment could rise to some 221 million, said Chen.
Related Roundup: iPhone 7
Tag: Foxconn
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28 months ago
I'm still with iPhone 6... with today's inovative Apple (and rumors for the iPhone 8) I just can't wait to skip it too..
28 months ago
That's what happens when you deviate from the previously successful policy of updating the iPhone design every 2 years. I couldn't see a single reason to upgrade my iPhone 6 to the 7.
28 months ago
Have we finally hit peak iPhone? Maybe Apple will give some attention to the Mac now?
28 months ago
Foxconn should credit itself for constructing such a quality iPhone 6 that I didn't feel compelled to upgrade! That said, my phone was replaced after just under 2 years due to a dodgy battery. Thank you EU consumer law (while it lasts in the UK)! But yes, perhaps it's also the fact that the iPhone 7 was wholly 'uncompelling'.
28 months ago
Dont see a surprise. Apple is not hungry anymore, If they don't come hard this year its over. look at amazon and google. The Alexa is killing Siri.
28 months ago
Apple need to justify the constant price increases.
The 7 is a really good phone but compare it to the OnePlus 3T (in fact, compare the 7, S7, Pixel, all these high priced phones) and suddenly "value for money" becomes an issue.
The 7 is a really good phone but compare it to the OnePlus 3T (in fact, compare the 7, S7, Pixel, all these high priced phones) and suddenly "value for money" becomes an issue.
28 months ago
The hardware needs to change from a rectangle to a..... rectangle?
I think the point is, this is the first time we're seeing Apple go on 3 years with the same design implementation.
Nobody is saying they need to change shape. But there's very little compelling about the 7 if you're already on the 6s, and possibly the 6.
The design of the two. from a visual perspective is identical, except for slightly adjusted lines. So here Apple released a new full version number (and not an S cycle) product, that shares the same visual design as the last version.
this is something they hadn't done in the past. It's been Apple's history that new numbered version also coincided with a visual re-design. if you look at the 1-3g-4-5-6, each one was visually unique from the ones previous. If you look at the 6-7, it's nearly identical. This is the sort of change that is more in line with the "S" cycle launches, and not new version.
But the new 7 does all that while also being controversial by removing the headphone port (yes, this is still a pain point). So, to most users, no new design. Less "functionality", same (or higher price depending where). it's a very VERY tough sell for those who are alreadyon a 6 or 6s.
What's the tentpole feature of the 7 that props it up above and beyond the 6 series? Where's that one feature that makes you go "dayum, that phone is SOOO much better than the 6s!".
this isn't discounting that the phone is a lot faster. there's nothing wrong with the internals of the iphone 7. But the point of diminishing returns is past with CPU performance, especially bound by limitations of iOS, that the faster CPU alone isn't really going to convince people en masse to go out and spend $1000 on a new phone.
IMO: The iPhone 7 is a misstep. and hopefully Apple follows up with the iPhone 8 in 2017 (earlier the better) that gives a real compelling reason for iphone 6 users to move. Whether that be OLED, return of the headphone port, higher display resolution for VR/AR compatibility, more storage as default. But the iPhone needs SOMETHING more than what was delivered in the iPhone 7 for there to be dramatic adoption
28 months ago
Hummm... I feel like MacRumors has turned into AppleBashers.
I'll be the first to say I wish they would have done XY or Z over the past years. I too scratch my head over technologies like Siri not maturing as fast as competitors... but I still think overall, Apple has one of the best solutions out there when you consider everything.
But... it sure would be nice to see some fire burning in Cupertino. Maybe this will be the year? Crossing my fingers.
We're all Apple customers so the proliferation of negative comments is a sign of just how unhappy many Apple users are right now. High prices, poor quality, frequent problems and a general lack of hardware updates.
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