iPhone X Shipments Drive 50% Growth In Foxconn’s December Revenue

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As Wall Street analysts debate whether the iPhone X shipments had been below their expectations, Foxconn has witnessed a record 50% jump in its December revenues. Foxconn is the sole assembler of the 10th-anniversary iPhone. The contract manufacturer said in a filing to the Taiwan stock exchange that its revenues in December rose 50% YoY and 18% month-on-month on the back of strong iPhone X shipments.

Foxconn posted $30.5 billion revenues in December alone

Foxconn, also known as Hon Hai Precision Industry, said its December revenues came in at NT$675 billion ($30.5 billion). The world’s largest smartphone assembler said the growth was driven by the delayed iPhone X shipments. Foxconn’s revenues also benefited from the anniversary model’s price, which is 20% higher than the iPhone 8 Plus. The iPhone X went on sale in November, roughly six weeks after the iPhone 8 and 8 Plus hit the store shelves.

The strong December performance helped boost Foxconn’s full-year 2017 revenues by 8% YoY to NT$4.7 trillion. The Taiwanese company had witnessed a 2.8% decline in its full-year revenues in 2016. According to Nikkei Asian Review, Foxconn’s smaller rival Pegatron also saw its revenues jump 6.61%. Pegatron assembles the iPhone 8 handsets. Nikkei, which closely tracks the Taiwanese tech sector, said all of the nine Taiwan-based Apple suppliers saw their revenues rise in 2017.

Wall Street analysts tend to scrutinize Foxconn and other Apple assemblers’ financial results for hints about the iPhone maker’s health. Yuanta Investment Consulting analyst Jeff Pu said Foxconn’s robust growth in December could be attributed to the fact that the iPhone X shipments only began in November. The phone’s higher ASP was another factor.

For a long time, Foxconn had been manufacturing electronic devices in low-wage countries such as China. But now it is increasingly using robotics and artificial intelligence in the manufacturing process, which would help it move some of its manufacturing to the US and Europe. The company has already committed to invest $10 billion in Wisconsin, United States.

Analysts expect iPhone X shipments to fall dramatically

Last month, Taiwan-based Economic Daily News reported that Apple had slashed its March quarter iPhone X sales forecast from 50 million to 30 million units. The company had also reduced orders at suppliers, according to the report. Since then, multiple analysts have lowered their iPhone X shipments forecast for the January-March quarter citing weaker than expected demand and a higher price tag.

JL Warren Capital expects Apple to ship only 25 million iPhone X handsets in the current quarter, down from their earlier estimate of 30 million units. Yuanta Investment Consulting has also trimmed its first-quarter iPhone X shipment estimate from 30 million to 26 million. Yuanta said Apple will likely sell 18 million iPhone 8 and 8 Plus units in March quarter, which would be a huge 50% decline from 36 million units in the holiday quarter.

Fubon Securities analyst Arthur Liao told clients that the iPhone X demand was “far below expectations” as there was “no exciting super cycle.” Largan Precision, which supplies camera lenses for iPhones, has told investors that its revenues in January and February could see a decline due to lower than expected demand for almost all high-end smartphones worldwide.

Apple could still post record holiday quarter numbers when it reports earnings on February 1. That’s because the iPhone X, especially the 256GB variant, is almost twice as expensive as many other premium smartphones. According to a survey by RBC Capital Markets, more than 60% of people interested in the iPhone X wanted to buy the 256GB model that costs $1149.

iPhone X, iPhone 8 and 8 Plus were top-selling smartphones

Data from Kantar Worldpanel showed earlier this week that the iPhone X, iPhone 8, and iPhone 8 Plus witnessed a “stellar” performance in most countries including the UK, Japan, and urban China. In the US, the iPhone 8 and 8 Plus outsold the iPhone X. They were the top three best-selling phones during the September-November period in the US. Samsung’s best-selling phone Galaxy S8 occupied the sixth spot.

In the UK, strong iPhone X sales helped iOS capture a record 49.4% market share. The anniversary iPhone accounted for 14.4% of all smartphone sales in the UK in September-November quarter. The iPhone X was also the top smartphone in Japan with an 18.2% share, followed closely by the iPhone 8 at 17.2%. In urban China, the most expensive iPhone grabbed 6% share, helping the iOS capture 25% of the total market.

However, the iOS’ share in the US dropped 3.8% YoY to 39.8% in the same period. Android gained 4 percentage points to dominate 59.4% of the US market. The iOS share in big five European markets (UK, France, Germany, Spain, Italy) also declined by 0.6% to 23.9%. In China, most of the iPhone X buyers were people switching from Huawei, Xiaomi, Samsung and other Android phones. That’s a positive sign for Apple in the world’s largest market.

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