Trade Resources Policy & Opinion Challenges Facing iPhone Suppliers

Challenges Facing iPhone Suppliers

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Taiwan-based makers in the iPhone supply chain must have been aware that sales of iPhone 6s and 6s Plus have gradually lost their momentum, meaning Apple's orders for iPhones and related parts and components are going to decline in the short term.

Some industry analysts have estimated that components in the iPhone supply chain are expected to see their orders fall short of expectations by 10-30% in the first quarter of 2016, and total orders for iPhone devices for the quarter are expected to drop to 50-54 million units, declining 12-20% from a year earlier.

Amid growing concerns about iPhone's business prospects, major suppliers have seen their sales begin to make correction recently. Taiwan Semiconductor Manufacturing Company (TSMC), Foxconn Electronics and Largan Precision, for example, saw their revenues sink 8%, 20.8% and 30.3% on month, respectively, in December 2015.

Apple's iPod, iPad, iPhone and MacBook series products have been trendsetters, but technology products have also faded into history fast. The iPod is now as good as dead, and demand for iPad has been dwindling sharply in the past two years. Perhaps, iPhone may face a similar fate shortly.

Although Apple has been seeking to rekindle its growth momentum in other maket segments, the launch of Apple TV seems to have hit a snag, and sales of Apple Watch have become sluggish recently despite the initial hype.

Apple is also trying to make inroads into the smart home and smart car sectors, but it may not be able to duplicate its previous success formula due to different ecosystems and business models.

With the exception of the China market, sales of iPhone devices in other emerging markets, including India, Latin America and Africa, have been lower than expected due to strong competition from China-based and local brands. Sales of other Apple product lines also face similar situations, indicating that Apple's current business model is not suitable for emerging and other immature markets.

Apple's suppliers must have already realized the risk of putting all their eggs in one basket. They need to make adjustments in the face of changing global economic patterns and make necessary deployments in emerging markets as soon as possible. And that is why Foxconn has been keen on establishing partnerships and production facilities in emerging markets.

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