This has been a rather busy week in multi-industry supply chain management and technology developments, and Supply Chain Matters need to catch-up.
In the consumer electronics supply networks arena, international business media was quick to note that two of Apple’s major iPhone supply network suppliers have taken a financial hit as a result of declining shipments, and Apple’s new emphasis on content and services for future revenue growth.
Prime manufacturing contract services provider Foxconn’s net profit fell nearly 18 percent in the first quarter, 2 percent below consensus estimates, as a result of declining Apple production volumes. Total revenues rose by 2.5 percent in the recent quarter. Shares of the contract manufacturer dropped a reported 2 percent on the news.
As noted in earlier Foxconn related commentary, Founder, CEO and Chairman Terry Gau has announced that he will eventually step down and run as a candidate for the President of Taiwan. The global contract manufacturer has now released a listing of board nominees for Chairperson. Nominations will be voted upon at the annual shareholders meeting next month.
LCD screen supplier Japan Display reported a year-over-year net profit decline of 17.2 percent in the first quarter, attributed to an overall slowdown in the global smartphone market, a slowdown in China and customers moving to OLED technology laden displays in flagship smartphones. Full year net profit declines amounted to approximately $993 million. The supplier is pursuing yet another bailout deal, this time with a reported Chinese-Taiwanese group.
Japan Display’s performance can be attributed to slowing demand of older iPhone models which feature LCD screens vs. flagship models that feature OLED screens.
The Trump Administration’s intention to move ahead with import tariffs of upwards of 25 percent on all additional imported products from China, to include computers, consumer electronics including smartphones has driven business speculation on the impact to Apple.
No doubt, Apple does have some influence in these matters, the escalating trade tensions and political posturing and rhetoric among the two nations may negate the iPhone manufacture’s influence in blunting the imposition of tariffs or an invoking an accusation of favoritism.
The previously announced intentions by Foxconn to initiate newer model iPhone manufacturing in India, and perhaps Vietnam, now has far more strategic significance.
In any case, Apple’s iPhone supply network stands to undergo additional financial and other impacts if the additional tariff goes into effect, depending on whether Apple passes the added cost along in even higher prices.
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