Apple


2022-05-11

Lingering Pandemic Vexes Economic Performance, 2022 Smartphone Production Volume Reduced to 1.333 Billion Units, Says TrendForce

According to TrendForce research, global smartphone production volume in 1Q22 was 310 million units, a QoQ decrease of 12.8%, primarily attributed to ongoing inventory adjustments in various distribution channels performed by a number of brands and the cyclical off-season, which led to relatively weak production performance in 1Q22. In 2Q22, a resurgence of the pandemic in the world’s largest consumer market, China, exacerbated the drop in global 2Q22 mobile phone production to 309 million units. However, compared to the same period in 2021, when a resurgent pandemic in India and Southeast Asia caused a sharp drop in total production, mobile phone production grew slightly by 0.7%.

TrendForce further indicates that the war between Russia and Ukraine continues to exacerbate the rising global inflation issue. High inflation means that personal disposable income will shrink and will inevitably lead to prolonged replacement cycles and reduced purchasing budgets for individual devices. Summarizing 2022, corrections in 1H22 were primarily due to the impact of China’s lockdowns on the economy while corrections in 2H22 highlight the inflation crisis. The total production forecast for the entire year will be revised down to 1.333 billion units and there is still room for downward revisions in the future.

Due to China’s economic headwinds, shipments fall again to 283 million, an annual decline of nearly 13%

From a regional perspective, due to China’s insistence on maintaining a strict “dynamic zero-COVID” policy and the recent festering of the pandemic, economic performance is also facing greater downward pressure and the demand for smartphones has likewise cooled in the face of pandemic prevention measures. Overall, the sales market share of China’s smartphone market still ranks first in the world but, due to the impact of the pandemic, its market share has dropped from 24.2% last year to 21.1% this year while the corresponding total shipment forecast fell from 325 million units last year to 283 million units, an annual decline of approximately 12.9%. Although the impact of the pandemic in the remainder of the region has been comparatively blunted, in the face of a rising inflation crisis, even the overpopulated Indian market will be unable to support substantial growth. From the perspective of the 2022 national shipment share ranking forecast, the top three positions will be held by China, India, and the United States, accounting for a 21.1%, 13.1%, and 11.0% share, respectively.

2022-05-09

iPad Air 2, iPad mini 2 are History, Officially Deemed Obsolete by Apple

(TechNews) Following Apple’s inclusion of the iPhone 6 Plus on its list of obsolete products in February this year, the iPad Air 2 and iPad mini 2 have also recently been added officially, making it difficult to obtain official repair services for these products in the future.

The iPad Air 2, launched in October 2014, was  Apple’s first iPad Air with Touch ID recognition and utilized the A8X processor. As for the iPad mini 2, which was launched in November 2013, it utilized the same A7 processor as the iPhone 5s, along with the M7 motion-sensing co-processor.

Apple mostly considers products that are 5 to 7 years old as outdated. The iPad Air 2 and iPad mini 2 have already exceeded this lifespan and it is quite reasonable to deem these products obsolete.

However, the inclusion of a product on the obsolete list does not mean that the device cannot be used. If consumers have maintenance requirements, it will depend on whether the company has replacement parts in stock. If there are missing parts, Apple will not repair this product for users.

(Source: https://technews.tw/2022/05/05/bye-bye-ipad-air-2-ipad-mini-2/)

2022-04-21

Will Foxconn Pivot Away from China?

(AmCham Taiwan|Contributing Writer: Matthew Fulco) Aggressive local competition and rising geopolitical risk make the contract electronics manufacturing giant’s China dependency more precarious than ever.

Hon Hai Precision Manufacturing Co., better known as Foxconn, is the largest private employer in China and has long depended on the country as its manufacturing base. As recently as 2018, Foxconn assembled half of the world’s iPhones at a massive factory in Henan Province.

Yet in recent years, Chinese manufacturers have aggressively moved into the Apple supply chain long dominated by Taiwanese suppliers and Foxconn in particular. According to Nikkei Asia, in 2020 Chinese suppliers to Apple outnumbered Taiwanese firms for the first time: 51 and 48, respectively.

“In Apple’s supply chain, Chinese manufacturer Luxshare has been Foxconn’s strongest competitor, as the company’s share of the Apple supply chain for hardware products including iPhone and Apple Watch is expected to keep rising in the next few years,” says Rachel Liao, a senior industry analyst at the semi-governmental Market Intelligence & Consulting Institute. For example, Luxshare produces Apple’s AirPods. The Chinese company also obtained about 3% of iPhone 13 Pro assembly orders in 2021, a share that is expected to increase to 5% in 2022, Liao adds.

Luxshare is not just competing with Foxconn in smartphones; the Chinese firm is also moving into the fast-growing electric vehicles (EV) industry, where Foxconn hopes to carve out a new niche. In February, Luxshare established a US$267 million EV joint venture with Chery group, one of China’s largest automakers.

Foxconn has lofty EV ambitions. In March, Chairman Young Liu said that by 2025 the company intends to reach 5% of the EV market share globally, with production capacity of 500,000 to 700,000 vehicles a year.

Initially, Foxconn seemed to be focusing on the China EV market, the world’s largest. In 2021, China’s electric vehicle sales surged 169% to a record 2.99 million units, accounting for almost 15% of overall vehicle sales in the country, according to the China Passenger Car Association (CPCA).

Foxconn announced in early 2021 that it would invest in the Chinese-German EV startup Byton. The planned investment – reportedly US$200 million – would be used to launch mass production of the Byton M-Byte by the first quarter of 2022.

But in September 2021, the tie-up with Byton hit a snag due to the Chinese startup’s poor financial condition, reported Nikkei Asia. It is unclear if Foxconn has other China EV investments of note, although in early 2020 the company said it planned to form a joint venture with Fiat Chrysler Automobiles NV to develop and make electric vehicles in China. Otherwise, its prospects in the country’s EV market – large and fast-growing but ultracompetitive – are uncertain.

“Taiwanese manufacturers are good at [automotive] component manufacturing and OEM production,” says Caroline Chen, a research manager at the Taipei-based market research firm TrendForce. She notes that electric vehicles require more chips than traditional vehicles, “which means automotive semiconductors present a big opportunity for Taiwan.”

Traditionally, Foxconn’s forte is not in chipmaking, but it has expanded into that segment in recent years. Last year, it acquired local chipmaker Macronix’s Hsinchu facility, which will likely be used to develop silicon carbide chips for automotive applications.

Regarding the China EV market, Foxconn will also have to consider that “China has endeavored to achieve self-sufficiency in chips for all sectors, including electric vehicles,” says MIC’s Eric Tu, an industry analyst.

Stepping up diversification

Given steadily rising labor costs in China, Foxconn started to shift some manufacturing capacity to lower-cost destinations in Asia more than a decade ago. The company accelerated those efforts after the U.S.-China trade dispute began in 2018. Though Apple products ultimately received tariff waivers, that situation may not be permanent. It is thus seen as prudent for Apple and its suppliers to reduce reliance on China.

“Due to geopolitical tensions in recent years, Apple has gradually moved assembly plants of iPhones to other countries, such as India,” notes MIC’s Liao. While the assembly of new iPhones is still mainly based in China, India has also started mass production of some models such as the iPhone 12. “It is expected that Foxconn will keep expanding its production capacity in India in the future, and mass production of the iPhone 13 in India will likely kick off around mid-2022,” Liao says.

Foxconn has also signaled its intent to participate in India’s development of a domestic semiconductor ecosystem, a US$30 billion initiative. It is the first foreign manufacturer to do so. In February, the Taiwanese company announced it would cooperate with Indian natural resources conglomerate Vedanta to build a semiconductor fab in the subcontinent. Vedanta will be the majority shareholder in the joint venture while Foxconn will hold a minority stake, the two companies said in a statement.

At the same time, Foxconn is expanding production capacity in Vietnam, where it had already invested US$1.5 billion by 2021. Early last year, the Vietnamese government approved Foxconn’s bid to build a US$270 million plant in Vietnam for the assembly of notebook computers and tablets. The Taiwanese manufacturer reportedly set up the facility at the request of Apple, which aims to better mitigate the risks it faces from U.S.-China trade tensions.

When Apple shifts production outside of China, Foxconn often benefits. However, China remains the U.S. tech giant’s paramount manufacturing base. With that in mind, it could be harder for Foxconn in the long run to compete with Chinese manufacturers on their home turf, especially as Chinese leader Xi Jinping is focused on developing technological self-sufficiency. In December, online technology news site The Information reported that Apple in 2016 inked a secret five-year, US$275 billion investment deal with China, likely one of the reasons Luxshare and other Chinese suppliers have become a much bigger part of the California tech giant’s supply chain in recent years. Under the terms of the agreement, Apple promised to work with Chinese manufacturers to create “the most advanced manufacturing technologies.”

Meanwhile, the business environment for Taiwanese firms in China is becoming more difficult amid strained cross-Strait relations. In November, Chinese regulators fined two Chinese subsidiaries of Taiwan’s Far Eastern Group ¥88.6 million (US$13.9 million) for alleged environmental protection, fire safety, and taxation compliance violations.

Beijing may also have been sending a political message to the company, which has previously donated to campaigns in Taiwan of both Democratic Progressive Party (DPP) and Chinese Nationalist Party (KMT) candidates. China “will absolutely not allow people who support Taiwan independence or destroy cross-Taiwan Strait relations, who dare bite the hand that feeds them, to make money in the mainland,” Taiwan Affairs Office spokesperson Zhu Fenglian said in November.

To be sure, Foxconn is known for the strong relationships it has built up in China over its 35 years of operating in the country. The company and a charity run by its founder Terry Gou were able to secure millions of Pfizer-BioNTech vaccines for Taiwan last year through Shanghai-based Fosun Pharma, which has the rights to distribute them in China, Hong Kong, Macau, and Taiwan, after a deal involving the Taiwanese government and BioNTech fell through.

That said, cross-Strait relations are at their lowest point in decades, and to Taiwanese the possibility of war seems a little less remote following Russia’s invasion of Ukraine. Given Foxconn’s preference for discretion, it is difficult to assess its readiness for a sharp increase in tensions with China. However, the company “does have an ability to pivot quickly to changes in the operating environment, to invest large amounts of money quickly, and to retain the trust of its clients, which will be useful should tensions between China and Taiwan rapidly increase,” says Ross Darrell Feingold, a Taipei-based lawyer and political risk analyst.

Feingold is not sanguine about the prospects for cross-Strait relations in the years to come. Even if the KMT, which is viewed more favorably by Beijing than the DPP, wins the presidency and/or a majority in the legislature in 2024, “there is little reason to believe such would result in China changing its views toward Taiwan or its policies that put pressure on Taiwan,” he says. “Unless China renounces the use of force against Taiwan or Taiwan creates a military capability that deters China, tensions are likely to continue to increase.” Such a prospect could bode ill for Foxconn and other Taiwanese manufacturers with extensive operations in China.

(Source: https://topics.amcham.com.tw/2022/04/will-foxconn-pivot-away-from-china/

2022-03-25

[Russia Ukraine] Russian-Ukrainian War Heralds Rising Inflation, 2022 Smartphone Production to Drop to 1.366 Billion with Continuing Downside Risk, Says TrendForce

According to TrendForce research, due to lower-than-expected sales in 4Q21, the smartphone market in 1Q22 not only needed to adjust its accumulated inventory of finished products, but it was also affected by  sluggish seasonal demand, resulting in relatively weak 1Q22 production performance. Coupled with the impact of recent events such as the Russian-Ukrainian war and lockdowns of Chinese cities, overall production performance in 1H22 will weaken, affecting total production in 2022. The original forecast of 1.38 billion units produced will be downgraded to 1.366 billion units, with annual growth rate slipping to 2.5%. Neither the COVID-19 pandemic nor the shortage of wafer production capacity has been significantly alleviated. This coupled with serious issues involving geopolitics, inflation, and energy shortages this year will generate variables in the smartphone market for 2022. Therefore, further downward revision of total 2022 production volume cannot be ruled out.

There are two key observations regarding the impact of the war on the smartphone market. First, brand sales have been suspended or have dropped sharply. According to TrendForce statistics, mobile phone sales in Russia and Ukraine account for approximately 3-4% of global market share, 85% of which are in the Russian market, with Samsung, Xiaomi, and Apple as the top three Russian mobile phone brands. Since Apple and Samsung announced the suspension of all exports to Russia, vacated market share will migrate to Chinese brands. If the war can be brought under control before the end of April, estimated impact on the smartphone market in 2022 will be approximately 20 million units.

Second, the war has exacerbated global inflation, which is strongly affecting energy and food prices in particular and is rapidly spreading from Europe to the world. This also implies that personal disposable income will shrink simultaneously, resulting in a prolonged replacement cycle in the smartphone market and phenomena such as falling budgets for stand-alone purchases. Due to inflation’s broad and profound influence, it is not yet possible to determine the extent of its impact on the global smartphone market but there is indeed a high risk of downward revisions in the future.

It should be noted, in addition to the war, the pandemic will continue to affect smartphone market trends in 2022. China, the world’s largest smartphone consumer market, is still adopting a dynamic zero-COVID policy. Not only will this policy exacerbate manpower and material shortages in the intricate smartphone supply chain, pandemic prevention activities will also throw cold water on demand. TrendForce believes, given China’s short-term economic growth rate, the current forecast for China’s smartphone market shipments will drop from approximately 325 million units last year to 300 million units, representing an annual decline of approximately 7.7%, and a possibility of a continued downturn.

2022-03-08

TrendForce Provides Data for Apple Conference

On the eve of Apple’s upcoming new product launch conference, the global market research organization, TrendForce, provides the following reference data for your articles and reporting.

Reference data as follows:

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