A new report indicates that Foxconn, which manufactures iPhones in China for Apple, has reduced the amount of overtime it sanctions for those who work on its assembly lines producing the iPhone 6s and iPhone 6s Plus. The reduction in the work schedule comes on the heels of a slowdown in iPhone demand.
The report states that iPhone demand fell beneath the previously-expected amount by a five to 10 percent margin. Aaron Rakers, an analyst at Stifel Nicolaus, noted that the amount of Apple handsets being exported from China dipped in November after having risen in the prior two months of October and November.
Raker’s prediction is that Apple will sell 74.7 million iPhones in the final quarter of 2015, which puts sales just about on par with the same time period last year, when the company sold 74.5 million handsets. Assuming profit margins are similar to those from 2014, that should still be impressive enough to closely match the whopping $18 billion in profit Apple earned during the last quarter of that year, which amounted to the most money ever earned by any company in history during one fiscal quarter.
The final quarter of 2015 of course includes the lucrative holiday shopping season, during which a recent report stated that Apple’s market share in terms of new device activations slipped by just over two percent. Apple’s new iPhone offerings this year were somewhat lackluster relative to those of 2014, which featured both a screen size increase for the regular iPhone as well as the introduction of Apple’s first phablet, the iPhone 6 Plus. 2015’s iPhone 6s and iPhone 6s Plus included incremental camera improvements and the new 3D Touch feature, so considering the lack of any major new features, sales about equal to those of 2014 shouldn’t be viewed as that much of a disappointment.
Still, observers, particularly those on Wall Street, where share prices of the company currently sit lower than where they did at the same juncture last year, are nervous about the company’s future prospects. The newly-reported manufacturing slowdown could fuel concerns, which also include tepid consumer reaction to the company’s Apple Watch and Apple Music launches as well as worries about a lack of new product ideas to propel future earnings.
Foxconn Reduces Overtime As iPhone 6s and 6s Plus Sales Are Expected To Slow Down