A deceleration in the manufacturing output at Foxconn, the factory that produces the lion's share of iPhone and iOS devices for Apple, has spurred concern for reduced quantities of Apple products on store shelves. In response to Foxconn changing from "Market Outperform" to "Market Perform" prompted JMP securities to downgrade its outlook on Apple stock. As a result, earnings expectations for the quarter has been reduced from $23 billion to $22 billion.
Foxconn growth has reportedly decelerated from 84% year-over-year growth in December to 37% in January and 26% in February, which is lower than the industry average. What could be causing this? JMP has some suggestions:
"We don't know the source of the (Foxconn) deceleration, but possible causes could include simply in-line iPhone sales due to more significant Android competition, weakness in computing products as tablet demand grows, and/or product transition risk around the iPad 2," Gauna wrote.
It's important to note that this doesn't mean that Foxconn is getting smaller, just that their growth is slowing; they're simply not keeping track with the rest of the industry. There is additional concern that the recent earthquake in Japan will affect availability of hard disk drives and NAND flash memory, further restricting Foxconn's (and the industry's) ability to meet customer demand.
Via Appleinsider.com
Ben
March 16, 2011 at 10:41pm
I read an interesting (Wired) article on Ars Tech the other day... Basically, some companies are choosing to move their manufacturing business back to the US, citing growing quality control issues. What was most interesting about it was that the company (Wired wrote about) is engineering designs that are easier and quicker to manufacture, essentially meeting or beating the savings from outsourcing.
It will be interesting to see if this [small] trend continues to grow.
