Foxconn plans ‘rare’ holiday as iPhone output fears rattle investors

“Foxconn, assembler of most of Apple Inc’s latest iPhones, will cut working hours over the week-long Lunar New Year holiday, a person familiar with the matter said, in a rare move that analysts interpreted as a sign of softening demand,” J.R. Wu reports for Reuters.

“Reports of slowing shipments and mounting inventories of the iPhone 6S and 6S Plus, as well as tepid forecasts from suppliers, have pushed Apple investors into unfamiliar territory after years of booming sales and surging shares,” Wu reports. “‘Chinese New Year is a big holiday and there is usually overtime for workers. But this year Foxconn will have a normal break,’ the person said, referring to the Lunar New Year which falls on Feb. 8.”

“The first quarter is usually a quieter time for suppliers and the most obvious period to cut production, adjusting for extra supply brought on for the holiday season at the end of the calendar year,” Wu reports. “[Some] analysts questioned the extent of any slowdown. ‘Apple has been gaining significant market share in pretty much every region, and I’m not seeing a global slowdown,’ said analyst Patrick Moorhead at Moor Insights & Strategy. Nevertheless, many are bracing for a production cut. Since early December, about a third of analysts tracked by Thomson Reuters have trimmed estimates on Apple.”

Read more in the full article here.

MacDailyNews Take: In other words: Production has been reduced during the most obvious time to reduce production and, even though Apple’s iPhone has been gaining significant market share in pretty much every region, ignore that and instead, based upon one anonymous source who says Foxconn is only having their usual New Year’s holiday and not working overtime this year, panic and sell.

Makes a lot of sense, huh?

Assembly of “S” model iPhones is easier than non-“S” model iPhones by design. Foxconn could simply have had an easier 4th quarter and made the number of units Apple ordered this year, whereas last year was the first year for “6” model iPhones and therefore Foxconn had a much steeper learning curve.

But, of course, that logical interpretation wouldn’t cause share prices to decline.

Use these transparent manipulations to your advantage.

19 Comments

  1. A common thread with all of the “fire Cook” comments I read, is how many ad hominem attacks the contain. I was reflecting why that was the case and realized, of course you’ll criticize someone personally for being gay if there’s really no major fodder elsewhere.

  2. What total BS! Foxconn cuts production *every lunar New Year holiday* to give workers the chance to travel home to distant locales and spend time with their families.

  3. This is the worst BS ever. Demand for the 6 was underestimated. Demand for the 6S was properly estimated. Overtime hours on lunar New Year are an indication of a problem, such as poor yields, rather than a positive. A supply chain and production that is going smoothly does not work on New Year.

  4. ok mdn,

    here is another task for you.

    ill informed and vaguely sourced rumors are the means by which the value of apple stock is constantly under attack.

    so in addition to a previous suggestion to track the cumulative accuracy (and/or lack thereof) of predictions by various analysts…

    how about tracking these leaks, (or reports, if you prefer) and how much they drive the value of the stock down and whether they turn out to be actually based on facts (to emerge later), or whether they turn out simply to be speculative bull

    correlations on source accuracy would be quite interesting. and if, as i suspect, they are primarily fud, such a compilation might well be useful to us investors.

    nobody gets it right all the time, but i would imagine that the compulsively wrong ones will be highlighted and be easily dismissed and discounted when they spout off in the future.

    who knows, such a list might even help smarten up wall street, not that we should really count on that happening.

    1. Absolutely true, Apple is constantly under attacked 366 days out of a year of 365. There is no other company on this planet earth is so rich likes Apple but also being bashing as much as Apple. Apple against the world, so many enemies.

  5. Doesn’t Foxconn assemble smartphones and other devices for many companies? Why does it need to necessarily be Apple as the only company being involved here? These people talk as though Foxconn only deals with Apple products. This is taken from the Foxconn Wiki:

    Foxconn is primarily a contract manufacturer and its clients include major American, European, Japanese, and Canadian electronics and information technology companies. Notable products that the company manufactures include the BlackBerry,[5] iPad,[6] iPhone,[7] Kindle,[8] PlayStation 4, Xbox One, and Wii U.[9]

    Foxconn’s holiday could be due to any number of companies having sales slowdowns and not just Apple. Talk about biased reporting slanted against Apple. It really sux to be an Apple shareholder with the news media always pointing fingers at Apple.

    1. FoxConn assembles Consumer Electronics for over 500 customers. Apple is, admittedly it’s largest customer, but it also assembles all of the major makers. Here is a partial list of the top 50:

      Acer Inc. (Taiwan)
      Alcatel (France)
      Amazon (United States)
      Apple Inc. (United States)
      Archos (France)
      ASRock (Taiwan)
      Asus (Taiwan)
      Barnes & Noble (United States)
      BenQ (South Korea)
      Blackberry (Canada)
      Cisco (United States)
      Dell Inc.(United States)
      EVGA Corporation (United States)
      Fujitsu (Japan)
      GE Thomson
      Google (United States)
      Griffin Technologies (United States)
      Gründig Mobile (Germany)
      Hewlett-Packard (United States)
      HTC (Taiwan)
      Huawei (China)
      Intel (United States)
      IBM (United States)
      Kyocera Communications (Japan)
      Lenovo (China)
      Lenovo/Motorola Mobility (China)
      LG Lucky GoldStar (South Korea)
      Microsoft (United States)
      Microsoft MSI (Taiwan)
      Motorola Communications (United States)
      NCR (United States)
      NEC Casio Communication (Japan)
      Netgear (United States)
      Nintendo (Japan)
      Nokia Oyj (Finland)
      PackardBell (Netherlands)
      Panasonic (Japan)
      Philips (Netherlands)
      Pioneer Electronics (Japan)
      Samsung (South Korea)
      Sanyo (Japan)
      Sharp (Japan)
      Siemens (Germany)
      Sony (Japan)
      TCL Communication Technology (China)
      Telefunken (Germany)
      Thomson (France)
      Toshiba (Japan)
      Vizio (United States)
      Xiaomi (China)
      Zoostorm (New Zealand)
      ZTE (China)

      1. I suppose as Apple IS FoxConn’s largest customer it is reasonable to think Apple production demands have some part in allowing for time off for employees. The alternative is that all the rest collectively have had a major dip in production demands.. Does anyone know how large a proportion of FoxConn production is due to Apple alone?

  6. Tim Cook could have ordered more phones this season so they could meet demand and not have to turn customers away. This could be why there are so many switchers last year. A lot of people buy a new phone when they need one. If Apple doesn’t have one to sell them they will go to Android because not missing calls is more important them. Others want instant gratification, if they can’t have it now they don’t want it. Apple has lost a lot of those people before with low inventory. Tim could have taken a bigger risk this year and ordered more than in the past.

    Foxconn probably doesn’t like to pay overtime or have angry workers. Quality usually goes down when people are overworked, or new people are added. The Apple plants get more scrutiny then other plants. It is probably cheaper for Foxconn to let people off for a national holiday.

  7. The memory compliant is total BS. Photos, video, and music take up a lot of space. Most people I know with smartphones don’t take a lot of photos or listen to music with headphones. They won’t use up that memory. Cloud storage and streaming is what people are using more of. Corporate buyers don’t want their employees with a lot of information on their devices.

    Samsung has convinced the press than removable storage is better, what a total lie. First it let them sell at lower prices telling customers they can upgrade later. Not telling them it makes it easy for a thief to steal their information. Not telling them that removable storage is not the same and slows down the phone because it has to move data around more. Now Samsung won’t use it in their top smartphone either.

    Side note: a straight person would have the same problems following Steave Jobs.

  8. 1. Production efficiency for the 6S is up over the 6
    2. Apple have better inventory management this year due to #1
    3. Other customers are reducing their orders
    4. Apple are planning to ramp up the C version and have built up inventory for the other phones
    Random FUD always happens and it is a great way to drive the price down. For sure Apple have just bought a ton of shares to retire. Always major players are going to buy in at this discounted rate and the stock will shoot up again for them to profit from it.

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