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The chairman of Hon Hai — better known as Foxconn — is reportedly telling subordinates that demand for Apple iPhones will stay weak until early next year, despite an anticipated fall launch for new models.
Terry Gou also told Chinese Premier Li Keqiang that Foxconn's overall orders were falling in 2016, with the exception of a rush in April and May, Japan's Nikkei said on Monday, citing sources. Foxconn is estimated to manufacture about 70 percent of iPhones, so while the firm does do assembly work for other companies, its fortunes can vary significantly based on Apple's performance.
One source described as with a "major supplier" claimed that iPhone shipments will slip to between 210 and 220 million this year, down by as much as 8.6 percent versus 2015.
Some Apple decisions are meanwhile causing problems in the supply chain, Nikkei added. The growing number of iPhone colors has resulted in inventory build-ups, according to one source, while Lin Chien-nan — the president of former Apple touch module supplier Wintek — suggested that the company's tendency to book extra orders can have the same effect.
"Apple is always overbooking its capacity. It works only when demand is strong. However, when demand softens, it leads to inventory correction for all the suppliers," he said.
Other sources claimed that Apple's upcoming "iPhone 7" generally lacks much innovation, although they backed reports that 5.5-inch models will have a dual-lens camera, enabling better zoom.
Apple experienced its first-ever year-over-year decline in iPhone sales during the March quarter, and many forecasts have been bleak about the iPhone's prospects, at least until this fall's iPhones have a chance to revive sales.