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(Reuters) – Apple Inc.'s (AAPL.O) the biggest iPhone assembler, Foxconn (2317.TW) aims to reduce its spending by 20 billion yuan ($ 2.88 billion) in 2019, as the company faces "a very difficult and competitive year," Bloomberg said Wednesday, citing an internal memo.
Visitors are seen on a Foxconn booth at the World Intelligence Congress in Tianjin, China on May 19, 2018. REUTERS / Stringer
The Taiwan-based producer said in a statement that it was conducting a regular annual budget review in an efficient way for 2019, but it was also the latest to signal concerns over demand for Apple's flagship devices.
Apple shares, at the heart of this week's brutal sale on Wall Street, rose 1.2 percent to $ 179.13 in a more stable global market.
They have fallen nearly 9% since Nov. 12, when one of its facial recognition service providers, Lumentum Holdings Inc. (LITE.O), reduces his outlook for the vacation quarter.
Foxconn shares, formerly Hon Hai Precision Industry Co Ltd., sold less than 1% to T $ 70.60.
Apple shocked investors earlier this month with lower-than-expected sales expectations for the Christmas quarter, which has bumped parts suppliers around the world.
US chip maker Lumentum was one of the first to lower forecasts with screen maker Japan Display (6740.T), followed by financial warnings from Qorvo Inc (QRVO.O), British chip manufacturer IQE (IQE.L) and the Austrian AMS (AMS.S).
Foxconn's iPhone business is expected to cut spending by 6 billion yuan next year, and the company plans to eliminate about 10 percent of non-technical staff, the Bloomberg report said in the region.
Foxconn said it regularly reviews its operations in order to reallocate resources between its operations.
"This year's review by our team is no different than similar exercises performed in previous years (to ensure we are) aligned with the current and anticipated needs of our customers, our global operations and the market and the economic context. challenges, "the statement said.
Foxconn recorded a lower than expected rise in its quarterly profit last week. The Japanese daily Nikkei announced earlier this month that Apple had informed Foxconn and rival Pegatron Corp. (4938.TW) to stop plans for additional production lines dedicated to the iPhone XR.
Industry analysts estimate that Apple has reduced its orders with its Taiwanese suppliers by 20 to 30 percent earlier in November, mainly because of weak demand for the iPhone XR and XS Max.
Apple started selling its more expensive iPhone XS and XS Max in September and its XR model last month.
Reportage of Arjun Panchadar in Bengaluru; Edited by Arun Koyyur and Patrick Graham
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