iPhone maker Foxconn posts 39% drop in profits, iPhone X production problems to blame?


Taiwanese company Foxconn, the main assembler of Apple products, reported a 39% slump in quarterly net profits. According to The Wall Street Journal, such a drop in margins was expected, but the results are notably worse than what analysts predicted. Foxconn hasn't experienced such a quarter-over-quarter decline since the global recession of 2008.

The most probable cause for this downturn is a series of production bottlenecks surrounding the iPhone X. As you might know, the $1,000 flagship is the first Apple smartphone to feature an edge-to-edge OLED display, and there were numerous reports about manufacturing difficulties involving these screens before the handset hit the shelves on November 3rd. 

Another big suspected barrier to higher production yields is Face ID - the new biometric authentication system which does a 3D scan of a user's face and replaces the fingerprint scanner (Touch ID) on the iPhone X. At the end of October, Bloomberg reported that Apple supposedly instructed suppliers to reduce the accuracy of Face ID in order to increase supply, a claim which was subsequently denied by Apple.


The definitive reason for the slowdown probably won't be officially disclosed anytime soon, but it's clear that Apple hasn't been able to cope with demand the way it probably wanted to. The iPhone X premiered 6 weeks after the iPhone 8 and 8 Plus amid huge lines at Apple stores and shipping estimates of 5-6 weeks. Company CEO Tim Cook admitted that it's hard to accurately calculate the demand for Apple's most popular products:


On the bright side, production of the iPhone X will almost surely rise in the following months. At the time of writing, shipping estimates for the device are already down to 3-4 weeks in the US, while European customers have to wait between 2 to 3 weeks. 

According to research firm TrendForce, about 44 million iPhones were made in Q3 2017, and these figures are expected to nearly double to 81 million devices in Q4. The iPhone X will likely account for about a third of the total number of Apple smartphones produced during that period.

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18 Comments

1. Rocket

Posts: 641; Member since: Feb 24, 2014

Haha!

2. amasog

Posts: 552; Member since: Aug 22, 2013

Hihi!

4. Techlover2018

Posts: 80; Member since: Jul 14, 2017

Everyone who does partnership with Apple ends up broken.

11. Phullofphil

Posts: 1762; Member since: Feb 10, 2009

Only if they rely on them than Apple goes somewhere else. Apple has made company’s monsters and took it away just like Cinderella.

18. sgodsell

Posts: 7187; Member since: Mar 16, 2013

This is Apple just preparing itself for its investors, just in case their sales fall short.

8. bobby84

Posts: 595; Member since: May 13, 2016

I bet 1/3 of the X have cracked glass by now. This has an effect on production

10. Phullofphil

Posts: 1762; Member since: Feb 10, 2009

I will take that bet.............what do ya say

5. palmguy

Posts: 978; Member since: Mar 22, 2011

Supply/Demand. Decreased demand the cause? "On the bright side, production of the iPhone X will almost surely rise in the following months."

9. darkkjedii

Posts: 30964; Member since: Feb 05, 2011

I'm actually looking forward to getting the X. Foot in mouth, but it's a nice ass device.

13. Phullofphil

Posts: 1762; Member since: Feb 10, 2009

I really like mine a lot as well I think you will. Face ID works well as long as your family members don’t look just like you. But even so it works great.

14. darkkjedii

Posts: 30964; Member since: Feb 05, 2011

Right on. Just gotta keep an eye on your tech. Not leaving it lying around, is the most secure thing you can do.

17. roscuthiii

Posts: 2383; Member since: Jul 18, 2010

"Apple supposedly instructed suppliers to reduce the accuracy of Face ID." I doubt Apple ever gave these instructions to the manufacturers... unless extremely early on. I would think the accuracy of FaceID would be based on algorithms within the firmware/software. If it were a hardware modification, wouldn't the manufacturers have had to make their process changes so early on that it would have predated delay rumors?

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