Key iPhone assembler Hon Hai Precision Industry Co (鴻海精密) yesterday saw its shares drop below the NT$100 mark after a report said the company might no longer be the sole assembler for iPhone Pro models next year.
Hon Hai shares were also under pressure after Apple Inc fell 3.07 percent overnight on the US market to US$126.04, the lowest in 18 months, as Wall Street became concerned about the iPhone maker’s sales and earnings outlook, as well as supply issues due to previous production disruptions at its Zhengzhou factory in China, Capital Securities Corp (群益金鼎證券) said in a note.
Shares in Hon Hai, also known as Foxconn Technology Group (富士康科技集團), closed 0.8 percent lower at NT$99.7 in Taipei trading, having dropped 4.13 percent this year, Taiwan Stock Exchange data showed.
Photo: Bloomberg
“For years, Apple has outsourced the assembly of iPhone Pro models exclusively to Foxconn. However, due to the imperative of risk management, getting a second electronics manufacturing service [EMS] provider for this task has been under consideration for some time as well,” market researcher TrendForce Corp (集邦科技) said in a report on Wedesday.
“Apple is reportedly to have made the plan of using another EMS provider besides Foxconn for the assembly of the iPhone 14 Pro models in the near future. This will serve as a trial run for diversifying its partners and locations for iPhone production,” TrendForce said.
“Due to the recent outbreak at Zhengzhou, Apple has also made the decision of employing Luxshare Precision Industry Co (立訊精密) as one of the assemblers for the upcoming iPhone 15 Pro Max,” it said.
Luxshare operates an iPhone assembly plant in China and runs a plant for assembling Apple-related accessories in Vietnam.
The Chinese company has no plan to set up a new iPhone production line in Vietnam, the report said.
However, because of the growing concern about geopolitical tensions, Apple is expected to markedly expand the number of overseas production sites that are outside China, the report said.
The US company is expected to double its device production capacity in India next year, and would see factories in Vietnam start making contributions by the middle of the year, it said, adding that at least 30 to 35 percent of Apple’s entire device production capacity is expected to come from India and Vietnam in the next few years.
“In view of the escalating trade dispute between China and the US, Apple will be compelled to rely only on production sites outside China to meet the sales demand of the North American market,” TrendForce said.
As China’s supply chain has started to experience a labor shortage this month due to the abrupt change in the country’s COVID-19 policy and the approach of the Lunar New Year holiday next month, Apple is facing a lack of workers, constraining its device production, TrendForce said.
Global iPhone shipments in the first quarter of next year are expected to drop 22 percent year-on-year to 47 million units, it said.
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