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Major Apple Supplier Saw December Sales Slump 20 Percent

Major Apple Supplier Saw December Sales Slump 20 Percent

By Reuters | Updated: 9 January 2016 13:32 IST

Taiwan's Hon Hai Precision Industry Co, which assembles the bulk of Apple Inc's latest smartphones, saw its December revenues slump by a fifth and full-year sales miss expectations.

The results, published on Friday, came amid growing concerns about slowing shipments of Apple's latest iPhone 6s models, which Hon Hai assembles.

Analysts said Hon Hai's results could be an indicator of demand for Apple's products in the first quarter of this year, but added that period was not normally a peak selling season and past iPhone cycles had followed a similar pattern, where an interim update on a model edition tends to see slower sales.

"The first quarter is an off season, a high base from last year and the global situation is not stable," said Leon Chu, investment manager at Franklin Templeton SinoAm Securities Investment Management in Taipei. "With all these factors, I'm going to be conservative."

Hon Hai, which goes by the trade name of Foxconn, reported December revenue of TWD 409.65 billion ($12.3 billion or roughly Rs. 82,274 crores), down just over 20 percent compared with both a year ago and November.

For 2015 as a whole, Hon Hai's revenue totalled TWD 4.48 trillion, up 6.42 percent, but below analysts' expectations for an annual gain of 7 percent, according to the average of forecasts of Thomson Reuters Starmine.

Hon Hai's revenue in 2014 rose 6.53 percent.

Hon Hai said in a statement that December sales were as expected.

Samsung Electronics Co Ltd said on Friday its fourth-quarter operating profit likely rose 15 percent from a year earlier, missing expectations and fuelling concerns the tech industry may be in for a year of slack gadget sales.

Taiwan Semiconductor Manufacturing Co, the world's largest contract chipmaker, said on Friday its December sales fell both on the month and on the year. The annual growth in sales for 2015 more than halved from a rapid pace of 2014, when the new iPhone 6 models were first launched.

A person familiar with the matter told Reuters this week that Hon Hai planned to observe a normal Chinese New Year break for its factories on the mainland, in contrast to recent years when overtime prevailed to keep production lines cranking out goods through China's biggest holiday.

The mood for Taiwan's trade-reliant island economy is grim. Its exports plunged by more than expected in December for the 11th month in a row in data issued Friday, putting the full year 2015 decline at its worst annual rate since the global financial crisis.

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