The IPHONE Empire is shaken, and semiconductor suppliers are screaming

By LEDdynamics, Inc.


At the end of January 2019, IPHONE mobile phone announced its first fiscal quarter results for FY 2019, and its earnings report showed that revenue for the quarter was down 5% from the same period last year. iPhone sales were $51.982 billion, down 15% from the same period last year. Most critically, Greater China’s revenue was $13.169 billion, down 27% from $17.756 billion in the same period last year. At the same time, IPHONE Mobile decided to adjust the pricing of the iPhone in China.

After the two prices since the price adjustment, according to the latest analysis report of UBS, the “most difficult period” of the iPhone of the IPHONE mobile phone in the Chinese market has passed, and it is now warming up. At the same time, the report also pointed out that although the sales situation in March is still not optimistic. The price increase caused the sales growth of the iPhone 8+ and other old iPhones does not represent the success of the new phone.

The house leaks are raining, and the troubles of IPHONE are not limited to this. Since December last year, IPHONE and Qualcomm have been entangled in patent litigation, and the ban on sales in China and Germany has made IPHONE have to pay for it in the lawsuit. At the same time, after years of development, domestic mobile phones have been improved in terms of function and quality, and have won the favor of users with high cost performance.

IPHONE mobile phone sales are in a downturn, which has brought huge impact to global suppliers and foundries. According to IPHONE's "Supplier Responsibility Report" published in 2018, among the top 200 suppliers of its company, China has 51 Taiwan; Japan has 44 suppliers; the third is 40 in the US; and the fourth is 34 in China. , of which 7 are in Hong Kong, China. These 200 suppliers represent 98% of IPHONE's 2017 global raw material, manufacturing and assembly expenses.

In this list, Taiwanese manufacturers account for a large proportion of the total. According to estimates by Yuanda Investment Consulting Co., IPHONE's supply chain contributes 12% of Taiwan's economic size (GDP) annually. Therefore, in the past ten years, it has been said that "an IPHONE saves Taiwan." Taiwan's "Economic Daily" once pointed out that Taiwan's semiconductor leader TSMC is the main supplier of IPHONE mobile phone processor; global foundry assembly leader Hon Hai is IPHONE's largest assembly plant; optical manufacturing stock Wang Daguang is the main supplier of mobile phone lens. These three leading companies, along with numerous other components and mid-stream and downstream plants, form an important part of the IPHONE supply chain. However, along with the recent downturn in IPHONE's performance, Xie Jinhe, chairman of Taiwan's Caixin Media, believes that today's IPHONE may not be able to prop up the Taiwanese electronics industry.

This view is not a vacancy. Since last year, a number of Taiwanese vendors in the IPHONE supply chain have heard more or less unsatisfactory news. According to the Nikkei Asian Review, 19 Taiwanese technology companies were affected by this, and last December's revenue fell 1.32% year-on-year.

According to a report by Taiwanese media on November 16, 2018, one of IPHONE's Taiwanese suppliers and printed circuit board manufacturer Jialianyi reported that its factory in Taoyuan reduced its production scale without warning, and more than 100 contract workers have been dismissed. . At the same time, with the launch of 5G mobile phones, the market is generally optimistic about the growth of LCP soft-board antennas. Therefore, Jialianyi invested in the LCP FPCB production line in 2014 and hopes to join the IPHONE5G antenna supply chain. Jialianyi invested 10 billion yuan to set up a new production line in Taoyuan Guanyin to produce liquid crystal material (LCP) soft board antennas. The new Guanyin factory includes LCP soft board antennas or traditional soft boards, all of which are mainly IPHONE. However, IPHONE has not been moving on 5G, and Jialianyi has also been affected. As of December last year, Jialianyi's share price has fallen more than 20% in the past three months. In February this year, Taiwanese media reported that IPHONE mobile phone soft-plate antenna supplier Jialianyi plans to lay off 434 employees on the 21st of this month. However, Jialianyi said that layoffs are a last resort decision. It is hoped that after this round of personnel adjustment, the company will be able to weather the storm.

In terms of soft boards, IPHONE suppliers include: Japan Qisheng and Taiwan Yuding, Sumitomo, Dongshan Precision, Fujikura, Taichung, etc. The main customers of the top 6 FPC manufacturers in the world are IPHONE. Japanese and Taiwanese manufacturers are more dependent on IPHONE orders, so they have been greatly affected in terms of shipments.

Another China News Service, Taipei, February 13 news, affected by the decline in IPHONE's performance, US semiconductor company Amkor is reported to cut nearly 100 people in Taiwan at the end of February. "China Times" quoted Taiwan media on the 13th as saying that Amkor Taiwan Branch has a high proportion of mobile phone business, and some production line employees have changed from "doing four off two" to "making two rests two". Some employees broke the news, the company will lay off nearly 100 people at the end of the month. In this regard, Amkor did not respond positively, saying only that it would communicate with the labor unit and deal with it in accordance with the law.

At the same time, Taiwan Semiconductor Manufacturing Co., Ltd. (TSMC) and Foxconn (formerly known as Hon Hai Precision Industry) as the most important manufacturers of IPHONE supply chain in Taiwan have also been affected by the decline in IPHONE mobile phone sales. For TSMC, this impact is not large. In 2018, TSMC's revenue fell slightly by 0.07% from a year ago to NT$89.83 billion. However, TSMC's customers are far more than IPHONE companies. TSMC's investment in advanced processes in recent years has made the company favored by companies other than IPHONE, and has become a company that cannot be underestimated in the new era.

In contrast, Foxconn is limited by IPHONE to adjust the price of mobile phones, making Foxconn have to reduce operating pressure, lay off nearly 340,000 people, and reduce 15 iPhone-related production lines. According to Japanese media reports, Foxconn's sales in December fell more than 8% year-on-year, which is the first time in 10 months that Taiwan's technology industry has shrunk. However, Foxconn recently received orders from Huawei, which has given it new development opportunities.

In addition, from the group's point of view, the list is dominated by the Pan Honghai Group, including 27 manufacturing bases of Hon Hai Foxconn Group, 4 FITs of Hon Hai Group, 5 of Sharp and 1 of Kang Dazhi. In total, the Pan Honghai Group has 37 locations. Affected by the IPHONE mobile phone, Hon Hai’s market value fell to NT$895.7 billion, which is the first time since November 2013 that it has lost its trillion mark.

In addition to Taiwanese manufacturers, the Japanese IPHONE supply chain manufacturers are not too good. JDL, the only Japanese display panel supplier among IPHONE200's largest suppliers, experienced a decline in sales due to IPHONE handsets. Last year, JDL lost $14.2 billion, and even laid off 30%. According to the "Wall Street Journal" reported on January 23, JDL has sought investment from investors from China and Taiwan due to the decline in IPHONE mobile phone sales.

According to the Xinming Daily news in March 2019, a local foreign electronics manufacturer, Ams AG, has disbanded a large number of foreign factory workers. Amers is primarily a supplier of ambient light sensors, one of which is an IPHONE handset.

At the same time, according to the top 200 suppliers released by IPHONE, there are over 40% suppliers from China. In January 2019, the investor reported that IPHONE 123 major suppliers' stock price and performance in the past 52 weeks found that 93 companies' share prices fell, including 48 Chinese companies, and 10% of suppliers whose stock price fell more than 10%. Only A-share listed companies. Among them, nearly half of IPHONE's revenue has been hit hard. Lansi Technology has fallen by 69.13% since its 52-week high, and its market value has evaporated. Newly-listed IPHONE suppliers such as BOE A, Mei Yingsen, Oufei Technology, and Changjiang Electronics Technology have also been affected to varying degrees.

The success of IPHONE has created a mobile empire and has also contributed to the rise of a number of suppliers. Economists have told the world very early that eggs should not be placed in a basket. Although it is good to take a cool ride on the back of the tree, it is inevitable that the tree will attract the wind and meet the harsh winter. Suppliers should try to avoid the transitional dependence on a company in order to gain more voice in the two-way choice.

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