Apple upstream suppliers such as Foxconn and Pegatron experience sharp share price declines during the Christmas 2017 holiday quarter.

Jacob Miramar

2018-11-21 11:36:00 Wed ET

Apple upstream suppliers from Foxconn and Pegatron to Radiance and Lumentum experience sharp share price declines during the Christmas 2017 holiday quarter. Foxconn, one of the major upstream suppliers for Apple iPhones and iPads, plans cutting costs at least $3 billion in 2019. In light of anemic demand for iPhones and iPads, Foxconn derives more than half of its revenue from Apple and now needs to reduce non-technical staff by at least 10%.

Foxconn faces a difficult and competitive year ahead.

As Goldman sets a lower share price target for Apple after the prior round of double cuts, this change triggers adverse ripple effects on the upstream assemblers from Foxconn to Pegatron. Foxconn assembles iPhones, tablets, laptop computers, and Sony PlayStations at factories in China, Taiwan, and America. As the smartphone market wanes and weakens in recent times, Sino-U.S. trade tensions exacerbate global economic policy uncertainty. Foxconn flagship technology conglomerates post net profits 12% below stock market analyst expectations as of late-November 2018. As the main facial recognition technology provider for Apple, Lumentum also experiences a 9% share price decline in recent times.

Other Apple upstream suppliers such as Pegatron and Radiance expect to receive more favorable net income results after the festive Christmas season.

Apple now diversifies its smartphone provision into 3 key product lines (i.e. iPhone XS, iPhone XS Max, and iPhone XR). The Apple value chain can reap the fruits of core business process improvements only when the average retail price increase outweighs the imminent decline in smartphone sale volume. Due to a relatively low price elasticity of demand for iPhones and iPads, the Apple value chain expects to rebound in share price performance in the next few months. In terms of technology transfer, most flagship smartphones from Apple and Samsung to Huawei, Oppo, and Vivo now employ organic light-emitting diode (OLED) curvy touch screens to ensure better resolution and facial recognition. In comparison, the more affordable iPhone XR and Xiaomi smartphones make productive use of liquid crystal display (LCD) flat touch screens for high resolution. As most of these flagship smartphones target early technology adopters and gadget lovers, more affordable smartphones attract mainstream users who are responsive to price and quality improvements. In equilibrium, this multi-market competition helps maintain mutual forbearance.

 


If any of our AYA Analytica financial health memos (FHM), blog posts, ebooks, newsletters, and notifications etc, or any other form of online content curation, involves potential copyright concerns, please feel free to contact us at service@ayafintech.network so that we can remove relevant content in response to any such request within a reasonable time frame.

Blog+More

AYA finbuzz podcast offers fresh insights into the latest stock market topics and economic trends for better stock investment decisions.

Daphne Basel

2019-09-30 07:33:00 Monday ET

AYA finbuzz podcast offers fresh insights into the latest stock market topics and economic trends for better stock investment decisions.

AYA Analytica finbuzz podcast channel on YouTube September 2019 In this podcast, we discuss several topical issues as of September 2019: (1) Former

+See More

Most lean enterprises should facilitate the dual transformation of both core assets with steady cash flows and new growth options.

John Fourier

2020-06-10 10:35:00 Wednesday ET

Most lean enterprises should facilitate the dual transformation of both core assets with steady cash flows and new growth options.

Most lean enterprises should facilitate the dual transformation of both core assets with fresh cash flows and new growth options. Scott Anthony, Clark Gi

+See More

Fed Chair Janet Yellen confirms with her successor Jerome Powell the final interest rate hike in December 2017.

Joseph Corr

2017-12-14 12:41:00 Thursday ET

Fed Chair Janet Yellen confirms with her successor Jerome Powell the final interest rate hike in December 2017.

Federal Reserve raises the interest rate by 25 basis points to the target range of 1.25% to 1.5% as FOMC members revise up their GDP estimate from 2% to 2.5

+See More

Zillow share price plunges 20% year-to-date as Redfin and Trulia also experience an economic slowdown in the real estate market.

Daisy Harvey

2018-11-17 09:33:00 Saturday ET

Zillow share price plunges 20% year-to-date as Redfin and Trulia also experience an economic slowdown in the real estate market.

Zillow share price plunges 20% year-to-date as its competitors Redfin and Trulia also experience an economic slowdown in the real estate market. The real es

+See More

USPTO fintech patent protection and accreditation

Andy Yeh Alpha

2023-01-03 09:34:00 Tuesday ET

USPTO fintech patent protection and accreditation

  USPTO fintech patent protection and accreditation   As of early-January 2023, the U.S. Patent and Trademark Office (USPTO) has approved

+See More

U.S. senators urge the Trump administration to prevent the IMF from bailing out several countries that face predatory Chinese loans.

Chanel Holden

2018-02-01 07:38:00 Thursday ET

U.S. senators urge the Trump administration to prevent the IMF from bailing out several countries that face predatory Chinese loans.

U.S. senators urge the Trump administration with a bipartisan proposal to prevent the International Monetary Fund (IMF) from bailing out several countries t

+See More