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: Flickr.com

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

Earnings calendar for the week of March 8

On the heels of lawmakers moving closer to passing the stimulus bill, inflations concerns gripped the market after Federal Reserve chief Jerome Powell at a meeting said the reopening would

Why Costco’s (COST) growth prospects might depend on beating costs, digital lag

Though the retail boom triggered by the pandemic was estimated to be short-lived initially, the shopping spree continued as customers stocked up on essential items, concerned about the persistent market

Gap (GPS) hopes to see a favorable recovery by the second half of 2021

Shares of Gap Inc. (NYSE: GPS) were up 5.8% in afternoon hours on Friday. The stock has gained 103% over the past 12 months. Gap reported mixed results for the

Add Comment
Loading...
Cancel
Viewing Highlight
Loading...
Highlight
Close
Top