This year’s Chinese New Year on Feb 6, workers at Taiwanese production facility for Apple Inc. (NASDAQ:AAPL) will be on holiday or work shorter week-long work hours. This is unusual for the production outlet, In the past employees worked to full schedule even during festive holidays.
Analysts believe that this rare move signals the softening in demand for iPhones. Besides, there have been several reports that high-inventories exist for iPhone 6S as well as 6S Plus. Suppliers too have signaled fall in forecasts indicating the demand for the Apple Inc.’s (NASDAQ:AAPL) devices has finally plateaued.
Drop in output
In the early hours of Wednesday media reports in Japan quoted parts-suppliers as saying they expect cutback in output from FOXCONN TECH CO TWD10 (OTCMKTS:FXCOF). The drop would be as much as 30% between January and March, the report said. This would aid dealers in exhausting their current stock, it reported. The media report led to 2.5% drop in Apple Inc. (NASDAQ:AAPL) share prices on Wednesday. The news affected the share prices of several of the company’s suppliers as well.
This time over the long-week of Lunar New Year holidays, Foxconn workers in China would not be getting the incentive of triple overtime pay. The factory would have ‘normal break’ said those in the knowledge of such matters.
Quiet First quarter
Traditionally, the first quarter production is lower as the stock of the December holiday season is expected to be exhausted. However, suppliers say there is cause for worry this year, because Foxconn has an unusual New Year Holiday. Additionally, the slow sales indicate sluggish outlook, as well as the government subsidies of $12.53 million that Foxconn was awarded.
That the slowdown in production was indicated as early as December, when casing makers and other suppliers said there would a drop in iPhone shipments for the very first time.
Analysts claim that it is just not that Apple Inc. (NASDAQ:AAPL) factory production in China has slowdown but the slowdown in across the Chinese economy.