Apple Supplier Foxconn Plans Huge Expense Cuts Over iPhone Sales

The reported concerns of the possible slowing of the demand for iPhone sale has forced Foxconn Technology Group, amongst the largest of the iPhone component supplier of Apple Inc., to plan extensive cost curtailment which would run into billions of dollars.

According to news report published in Bloomberg News, in 2019, the Taiwanese manufacturer plans to reduce expenses by 20bn yuan (£2.3bn).

According to the news report the company circulated an internal memo where it said that Foxconn faces “a very difficult and competitive year”. The media report states that in 2019m Foxconn would need to trim down 6bn yuan from its expenses for its iPhone operations alone.

For the California-based Apple, the iPhone is a significant source of profits. According to the plans drawn up for cosy curtailment by Foxconn, owned by Hon Hai Precision Industry, there would have to be retrenchment of one in 10 non-technical staff. The news report also claimed that the company also has plans to undertake a review of all of theose employees who currently draw a salary of more than $150,000 (£120,000) a year.

In 2017, Foxconn generated revenues of £3.7bn. Apart from Apple, the products manufactured by the company are also supplied to some of the other tech giants such as Google and Amazon. The company has of in recent times however been criticised for its unethical work practices and in particular for its use of a disposable workforce which it can terminate at any point in time.

The very recent sell off in the US stock market had been triggered by Apple. That sell off saw the biggest of the listed companies at Wall Street losing out billions of dollars from their market value.

There was a very slight increase of 0.4 per cent in the value of Apple shares in early trading on Wednesday in New York. The iPhone maker has however lost more than 20 per cent in stock value after its shares hit a record high at the beginning of October which made it the first trillion dollar company every in the world.

Concerns over drop in orders by their large customers have recently forced at least four suppliers of Apple to drop their revenue forecasts. In the third quarter of the year, lower than expected profit was reported by Foxconn.

According to some reports in the Japanese media, orders to suppliers for its lower-cost iPhone XR were cut recently by Apple. Foxconn is a major assembler of the iPhone XR.

“We regularly review our global operations. The review being carried out by our team this year is no different than similar exercises carried out in past years to ensure that we enter into each new year with teams and budgets that are aligned with the current and anticipated needs of our customers, our global operations and the market and economic challenges of the next year or two,” said a spokesperson for Foxconn.

(Adapted from


Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s