Major Apple assembly partner Foxconn Technology Group has reported its first ever sales drop since the company went public in 1991. A report from Nikkei indicates “lukewarm demand” for the iPhone 7 and a “saturated smartphone market” are to blame for the company’s downturn.
In total for 2016, Foxconn’s revenue of 4.356 trillion New Taiwan dollars (approximately $136 billion) was down 2.8 percent from its 2015 earnings. As a slight bright spot, its revenue for December grew 9.8 percent year-on-year because of increased user spending for the approaching Chinese New Year holidays, “and the relatively robust demand for the 5.5 inch iPhone 7 Plus model.”
Apple, which accounts for over 50% of Foxconn’s revenue, reported an overall revenue decline for 2016, spurred in part by the Cupertino firm’s first year-over-year decline in iPhone sales. Industry analyst Vincent Chen estimates that 207 million iPhones were shipped in 2016, down from 236 million in 2015.
Chen does expect a turnaround for Foxconn this year, as he sees the tech company’s revenue growing 5 to 10%, due to “healthier demand” for the upcoming 10th-anniversary “iPhone 8.” Chen believes a mild rebound in the PC market will also aid growth for Foxconn. He says 2017 iPhone shipments could rise to around 221 million.