Categories Consumer, Technology

Apple supplier Foxconn looks to cut costs and jobs in preparation for tough year

Foxconn Technology Group, the major supplier to Apple Inc. (AAPL), is planning to cut down costs significantly in preparation for a tough and competitive year in 2019, according to a report by Bloomberg. This cost reduction plan will include the elimination of jobs.

apple supplier foxconn plans costs and jobs cuts
Picture Courtesy:

Foxconn is looking to cut around $3 billion in expenses in 2019 and these include cost cuts at its iPhone assembly division as well. The company is also planning to cut jobs and this is currently estimated to comprise 10% of its non-technical team.

While Foxconn has attributed these actions to a business planning process that it undertakes every year, the fact that the company is Apple’s top supplier has sparked concerns over slow iPhone sales. Apple recently disclosed that it will not report unit sales hereafter and analysts suspect this could signal weakness in iPhone unit sales in the near term.

Goldman Sachs lowered its price target on Apple citing weak demand for iPhones in China and other emerging markets. Foxconn is also struggling with weakness in the smartphone market as well as trade concerns between the US and China.

Apart from Foxconn, other Apple suppliers have also lowered their revenue outlooks due to reductions in orders. While Apple has shifted its strategy to focus more on services, its suppliers are still dependent on volume.

FAANG stocks lose their sheen in tech rout

These lowered outlooks and reductions on the part of suppliers have led to a drop in Apple’s stock. Over the past two days, the company has been in a bear market, which refers to a drop of 20% or more from its 52-week high. Apple’s shares saw a slight recovery on Wednesday and as of 2:35 pm ET, the stock was up 0.58%.


Follow our Google News edition to get the latest stock market, earnings and financial news at your fingertips.

Most Popular

Should investors worry about Micron’s (MU) weak Q4 results and guidance?

The semiconductor industry is a rapidly growing business segment that currently thrives on the digital transformation wave. The demand for memory chips and other semiconductor products increased over the years,

What has Bed Bath & Beyond (BBBY) outlined for this fiscal year?

Shares of Bed Bath & Beyond (NASDAQ: BBBY) were up on Friday, a day after the company delivered disappointing results for the second quarter of 2022. The company reported a

NKE Earnings: Highlights of Nike’s Q1 2023 results

Nike, Inc. (NYSE: NKE) has reported a decrease in net profit for the first quarter of 2023, despite a modest increase in revenues. The company's stock suffered a big loss

Add Comment
Viewing Highlight