According to TechNews’ report, Foxconn announced its October revenue on November 5th, reaching 741.2 billion NTD (New Taiwan Dollars). This represents a 12.20% month-on-month increase and a 4.56% year-on-year decrease, marking one of the highest revenues for the same period in recent years. For the accumulated revenue in the first ten months of this year, Foxconn achieved 5.494 trillion NTD, marking a 7.21% year-on-year decrease but still staying relatively high compared to past years.

Examining the performance by product categories on a monthly basis, the “Computing Products” category exhibited robust growth, benefiting from pre-holiday stockpiling due to the Chinese “Double 11” Shopping Festival and the Thanksgiving holiday in North America. The “Cloud and Network Products” category also saw strong growth as a result of increased demand from American server brand clients.

The “Smart Consumer Electronics” category experienced growth due to demand for new products, as well as early holiday stockpiling in preparation for Chinese Double 11 and the North American Thanksgiving. In contrast, the “Components and Other Products” category remained relatively stable month-over-month, as increased shipments of components for consumer intelligent products were offset by reduced demand in non-core business segments.

Looking at annual performance by product categories, the “Components and Other Products” category experienced substantial growth, attributed to an increased share of supply in consumer intelligent products and growth in shipments of automotive electronic components. The “Consumer Intelligent Products” category remained relatively steady.

In contrast, the “Cloud and Network Products” category displayed a more conservative momentum in client pull-ins, and the “Computer Terminal Products” category showed signs of weakening due to a slowdown in PC market demand.

Foxconn’s outlook for the fourth quarter remains positive, anticipating that the latter half of the year will benefit from the traditional peak season in the information technology industry. Therefore, operations are expected to gradually pick up each quarter, and the company maintains its view that the fourth quarter will exhibit significant growth compared to the third quarter.

Recent report from Anue has also suggested that Foxconn secured more than half of the orders for the MacBook series for the first time this year, along with strong sales of the iPhone 15 Pro, which are likely to drive revenue growth in the fourth quarter.

(Photo credit: Foxconn)

Non-Apple IC manufacturers are reporting positive business performance this quarter. Chinese brands are experiencing a revival driven by the release of new Huawei smartphones, and a resolution in inventory clearance in emerging markets. This has led to an increase in orders. Additionally, Samsung’s success in foldable phones is contributing to the upsurge. This overall trend is benefiting companies like MediaTek and Novatek in the smartphone-related IC manufacturing sector.

As reported by CTEE, China holds about 25% of the global smartphone market, with industry analysts predicting sales of 260 million units in China for 2023. Huawei’s re-entry into the smartphone market will significantly impact the smartphone SoC market share in 2024. This development will challenge Apple’s market share in China, and Huawei’s upcoming Nova mid-range smartphones will also affect brands like Honor, OPPO, Vivo, Xiaomi, and others, as they vie for market share.

Key drivers of the smartphone industry’s recovery

According to Economic Daily News, many Chinese smartphone brands are optimistic about the local market’s improvement following the launch of Huawei’s new smartphones. Beyond flagship models like the Mate 60, mid-range series like Nova are also showing increased activity. Leading non-Apple smartphone manufacturers are gearing up for a surge in demand and are actively stocking up on top-tier flagship chips, thus stimulating the supply chain’s demand for additional orders.

At the same time, Taiwanese manufacturers mention that Chinese smartphone brands that primarily target emerging markets have already digested their accumulated inventory and are now starting to replenish their stocks. Some smartphone-related chip manufacturers have also pointed out that Samsung and other Korean smartphone giants are enjoying good sales of foldable phones and have recently conveyed messages about increasing orders.

TrendForce notes that the current revival on demand side in the global smartphone market is primarily driven by inventory restocking. The potential for sustained orders remains uncertain due to the prevailing economic challenges.

(Image: MediaTek)

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According to IJIWEI’s report, as the return of Huawei intensifies competition in the Chinese market, Chinese smartphone manufacturers such as OPPO and Transsion are venturing into the Southeast Asian market, a move that is expected to pave the way for sales recovery in the coming year.

In September this year, OPPO hosted a global launch event in Singapore for two high-end foldable smartphones, the Find N3 and N3 Flip.

Elvis Zhou, Chief Marketing Officer for OPPO’s overseas division, stated that the smartphone industry is expected to make a recovery in 2024 and 2025, with foldable smartphones playing a crucial role. While shipment volumes may not be as high, foldable smartphones have been growing at a rate of over 100% annually, and their average selling prices far exceed those of regular smartphones, creating significant value. This is why OPPO is fully committed to foldable phones.

Andy Shi, President of OPPO’s Asia-Pacific region, emphasized Singapore’s significance as a pivotal hub with substantial economic and political influence in the Southeast Asian region. He pointed out that a large number of high-end smartphone users who frequently travel for work are key influencers in this area.

The decision to launch OPPO products in Singapore is aimed at leveraging this advantage for further market development. Despite existing macroeconomic uncertainties, Andy Shi expresses optimism, anticipating moderate growth in the Asia-Pacific region for the upcoming year.

Furthermore, Tecno, a subsidiary of Transsion Holdings that has been known for its long-term focus on entry-level smartphone models in Africa, has recently introduced its latest foldable smartphone in Singapore, marking its debut in the Southeast Asian market.

According to TrendForce’s data, Transsion, along with its subsidiaries Tecno, Infinix, and itel, has not only outperformed Vivo but also claimed the fifth position in the global market during Q2. The company’s growth trajectory is expected to sustain its momentum in Q3.

Regarding the development of the folding phone market, TrendForce has also stated in a previous press release that shipments are poised to surge dramatically to 18.3 million units, marking a 43% year-on-year increase by 2023. Nevertheless, this only constitutes a modest 1.6% of the total smartphone market for the year. Looking ahead to 2024, the growth is expected to continue, with a 38% increase, resulting in a substantial 25.2 million units and pushing the market share to 2.2%.

(Photo credit: Phantom)

In the fourth quarter, Qualcomm reported a year-on-year revenue decline of 24%, amounting to $8.67 billion for the period ending on September 24. Nevertheless, this figure exceeded the market’s projected $8.51 billion. Akash Palkhiwala, CFO of Qualcomm, stated that the smartphone market is showing signs of stabilization, and Qualcomm’s chip sales are on the path to recovery.

CEO Cristiano Amon further elaborated that most smartphone companies have successfully bring up their inventory and are now placing new orders. He expressed, “we are cautiously optimistic as we go forward with that stabilizing and the normalization of Android channel inventory.”

According to reports from China Times, Huawei, once a former client of Qualcomm, has ventured into designing and producing its smartphone chips, thus emerging as a new competitor for Qualcomm. Amon emphasized that he thought Huawei’s return to the market will affect very small to Qualcomm’s relationships with other Chinese smartphone manufacturers. CFO Palkhiwala indicated that sales to Chinese smartphone clients are expected to grow by 35% compared to the previous quarter.

Notably, Qualcomm’s prominent client, Samsung Electronics, continues to rely on Qualcomm chips for the majority of its recent devices. Amon confirmed that Qualcomm will continue to dominate the chips used in Samsung’s upcoming S24 series of smartphones. Financial analyst Logan Purk from Edward Jones highlighted that the resurgence in demand for Android smartphones is closely tied to the significant growth in demand from Chinese OEM manufacturers. This may be a key factor contributing to Qualcomm’s consistent performance and improved outlook for the next quarter.

TrendForce, focusing on the smartphone industry, analyzed that the completion of inventory adjustments by leading process manufacturers is set to stimulate activity for upstream foundries. However, when it comes to the overall recovery of the smartphone market, there are still many uncertainties present, such as ongoing conflicts, the economic revival of major powers, and geopolitical factors. Even though the market has shifted from an extremely pessimistic outlook, there is still no clear signal supporting an optimistic and upward trend. Consequently, a slight growth of approximately 3% over the course of the year is expected.
(Image: Qualcomm)

According to Bloomberg’s report, Taiwanese company Wistron, previously one of Apple’s iPhone assembly suppliers in India, has agreed to sell its 100% stake in Wistron InfoComm Manufacturing (India) Private Ltd. to Tata Group for $125 million on October 27, 2023. Wistron will formally exit Apple’s supply chain, and Tata will become the first local iPhone assembly supplier in India.

TrendForce’s insights:

1. Apple Focuses on Indian Manufacturing as Wistron Exits iPhone Assembly Business

Amid international geopolitical risks, Apple has chosen to diversify its supply chain and production risks by shifting its iPhone assembly business from China to India. Apple’s decision to opt for India is primarily due to the fact that since 2015, India has become the fastest-growing regional market for smartphones globally.

Additionally, in recent years, the Indian government has actively worked to make India an attractive manufacturing and export hub for international companies. With strong government policy support and a vast domestic market, these factors have allured Apple to shift its production base here.

In the past, Wistron, along with Foxconn and Pegatron, was one of the three iPhone manufacturers for Apple in India. However, in 2020, there were reports of a riot at Wistron’s Indian factory, where thousands of Indian employees were dissatisfied with excessive working hours and unpaid wages. They vandalized the factory and even stole iPhones. This incident prompted Apple to initiate an investigation and ultimately led to a temporary suspension of its orders with Wistron.

Additionally, on July 17, 2020, Wistron announced the sale of its iPhone assembly plant located in Kunshan, China, to Luxshare Group. While this factory had an annual revenue that could exceed 100 billion yuan, its net profit margin was only 0.2%.

It can be inferred that the profit margins in the subcontracting business were inherently low, and following the riot incident at its Indian plant, Wistron may have lacked the bargaining leverage with Apple. Therefore, after considering all factors, it decided to sell its iPhone assembly plant in India.

2. Tata Group Takes Over India Manufacturing, But Expectations Are Low for a Significant Increase in Their Share of New iPhone Assembly

Currently, Wistron’s factory in Bengaluru is primarily responsible for assembling orders for the iPhone 14. To qualify for production subsidies from the Indian government, Wistron has committed to producing at least $1.8 billion (USD) worth of iPhones by March 2024.  After this transaction is completed, Tata Group will take over and fulfill this commitment.

Previously, Tata Group’s casing factory produced only one out of every two components that met Apple’s standards, indicating significant room for improvement in its yield rate. By examining the outsourcing production share table below, it is evident that Foxconn has the highest share in Apple’s current new iPhone assembly. Among these four models, only certain models like iPhone15 and iPhone15 plus are produced by Tata Group in India.

This suggests that Apple may be allocating the production of relatively less popular models to Tata Group for testing their yield rates. This decision may be due to the positioning of iPhone and Plus series products, coupled with their comparatively lower sales performance in recent generations. Apple is likely doing this until the production standards of the Indian outsourcing factory can be confirmed to meet 100% compliance.

Consequently, even though Tata Group’s acquisition of Wistron’s subcontracting factory is expected to expand its capacity, its share in new iPhone assembly is unlikely to significantly increase in the short term.

Read more

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