Throughout November, we saw reports of cuts at many iPhone suppliers, supposedly due to order cuts from Apple regarding demand weakness in iPhone XS and iPhone XR.
However, arguably the two most important members of Apple’s supply chain, Foxconn assembly and A12 chipmaker TSMC, just reported good revenues for November (via Bloomberg).
The majority of iPhones are assembled by Foxconn and all of the Apple SoCs (like the A12 Fusion) are manufactured by TSMC. This should make their sales a good proxy for iPhone performance.
Foxconn (Hon Hai) reported record revenue for November, about $19.5 billion. TSMC’s sales of $3.1 billion are not records, and are lower than October highs, but are resiliently-strong numbers. In TSMC’s case, Apple orders are expected to offset downturn in the cryptocurrency mining markets, which TSMC benefited from greatly in the Bitcoin boom of late 2017.
A good showing for November from these key iPhone suppliers counters some of the recent pessimism regarding iPhone performance. Obviously, a 30 day snapshot certainly does not discount all other indicators but it is a bright spot in an otherwise bleak outlook.
Apple reports its holiday earnings in January and investors will be watching closely at the bottom line revenues and next-quarter guidance for signs of iPhone weakness. The company will no longer be reporting real unit numbers, only revenue and gross margin for each of its major product categories.
AAPL stock is currently nearing an annual low, down 25 percent compared to highs of three months ago, with many analysts concerned that iPhone sales will fall over the next year.
