Key Apple Supplier Halts Hiring Due To Poor iPhone Sales

Tyler Durden's picture

Two months ago, Tim Cook reportedly wrote Jim Cramer that everything was awesome with iPhone sales in China. Days later, channel checks appeared to call Cook's statement into question. Several day ago, one of Apple's component makers - Dialog Semi - issued cautious guidance strongly suggesting iPhone sales momentum was weakening. Apple's earnings produced disappointment as China sales rather notably fell (but was quickly dismissed by analysts as US sales rose) and now, perhaps most worrying of all, Taiwan’s Pegatron Corp - maker of Apple's next-gen iPhone 6S and iPad - has halted hiring in its Shanghai factory as workers note "sales of iPhone 6S have been disappointing."

In May 2013, Pegatron became "the new FoxConn" as then new Chief Executive Tim Cook, Apple divided its weight more equally with a relatively unknown supplier, giving the technology giant a greater supply-chain balance.

Pegatron Corp., named after the flying horse Pegasus, will be the primary assembler of a low-cost iPhone expected to be offered later this year. Foxconn's smaller rival across town became a minor producer of iPhones in 2011 and began making iPad Mini tablet computers last year.

Back in June 2014, everything was awesome:

Two companies that assemble Apple’s iPhones and iPads are on a hiring spree, a signal that orders from the Cupertino-based group are ramping up ahead of the launch of a new device.
not so much

 

Taiwan’s Pegatron Corp, which employs 100,000 people, said on Monday that it is expanding its workforce in mainland China by 30 per cent to keep up with the production of smartphones.

But now, in October 2015, the huge facility at Pegatron Technology's factory in Shanghai sports a deserted look, as China Daily reported moments ago.

Gone are crowds waiting for job interviews or others who come to enquire about possible job openings.

 

The facility, which at its peak employed around 100,000 people, has temporarily suspended hiring as demand for Apple products has waned considerably.

 

The winding passage that leads to an interview room is all but deserted. Rather than excited faces, one can see young employees trudging out of the facility with fatigue and despair written large on their face.

 

Zhang Libing, a 23-year-old from Anhui province, told China Daily that he had just resigned from his job at Pegatron as he was exhausted and fatigued with the long working hours. Next to him was a huge electronic screen that kept flashing the message that the company has put on hold all fresh hiring for the time being.

 

"We are not surprised at that," Zhang said. "The sales of iPhone 6S have been disappointing. I am afraid that if we do not leave now, we will be laid off soon."

 

...

 

China, its biggest market outside the United States, accounted for nearly one-fourth of its total revenues in the fourth fiscal quarter because of its robust handset sales in the country. But fresh concerns have arisen over whether the company would be able to sustain the sales momentum.

 

Fading enthusiasm for iPhones in China has dragged down the device prices in the parallel market and hit new orders to the supply chain partners.

 

Pegatron was planning to hire roughly 40,000 workers for its Shanghai plants in the summer when Apple entrusted it with the iPhone 6S and iPad manufacturing. The current employee strength of the company remained unclear.

It appears things have changed dramatically in a very short period of time...

Cai Xiaoshuai left his hometown in Luoyang of Henan province and landed a job at the assembly line in Pegatron four months ago. But the 22-year-old man said he had had enough. His basic wage was 2,020 yuan ($320) per month and he had to work overtime for 2.5 hours every day to make sure that his salary would get close to 4,000 yuan.

 

"Some of my friends went to Kunshan in Jiangsu province to try their luck there. But it seems that the electronics industry there is in an even worse shape. So I am thinking of staying on and checking out other opportunities in Shanghai. But I will definitely not work in any electronics company. I have had enough," said Cai.

Which leaves us asking, as we did when doubts began to surface about Cook's letter to Cramer:

So is AAPL the next AOL, and is Tim Cook the next Thorsten Heins?

 

It all depends on China: if the world's most populous nation can get its stock market, its economy and its currency under control, then this too shall pass. The problem is that if, as many increasingly suggest, China has lost control of all three. At that point anyone who thought they got a great deal when buying AAPL at $92 will have far better opportunities to dollar-cost average far, far lower.

Oh, and to anyone still holding their breath for AAPL to file a public statement which may well contain an outright lie, you may exhale now.

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Buckaroo Banzai's picture

In fairness to Tim Cook, like most homosexual men, he does spend a lot of time and energy looking to get his cock sucked.

Heterosexuals should be forced to sit in a corner and stare at the walls for a few hours a day to level the playing field. There's only 24 hours in a day and when you're spending 4 of them on Grindr, it makes it a little tougher to get real work done.

Ham-bone's picture

China...Fictional Fairytale Vs. Factual Truths

China is economically doomed but do they hold the ultimate trump card in 10k+ tons of gold???

The pivot by BRICS, OPEC, etc. turning away from US Treasury's to initiate and maintain ongoing physical gold purchases coincided with a simultaneous and ongoing collapse in the price of gold (gold's price peaked in July '11 and has fallen by a third since?!?). Suffice to say, when the price of something collapses on ongoing record (physical) demand and the price of something else rises on a collapse in demand...these are not typical free market responses. When the largest and most fundamental markets act contrary to supply and demand...when the cornerstones of a market are seemingly removed...the validity of the market signals in general are clearly up for debate?!?

http://econimica.blogspot.com/2015/11/chinafictional-fairytale-vs-factual.html

Anopheles's picture

China has an internal debt upwards of 30 TRILLION dollars.  That money has gone into their own infrastructure the past couple decades to pay for the rapid urbanization of China. Look up ghost cities in China.

10,000 tonnes of gold?  That's PEANUTS.   10k tonnes is only 365 billion dollars.   And tell us, what happens to gold prices if they try and SELL some of their stash?  

Finally, they don't have 10k tonnes.   Maybe a thousand above their official tally of 1,600, but nowhere near 10,000. 

Boxed Merlot's picture

10,000 tonnes of gold?  That's PEANUTS...

 

Which means the USA's 8133 tonnes is ?  To be "fair", the 8133 figure is the official measure and the highest of all nations on the earth, but as to your comment, how would you describe the US' holdings in relation to an 18T frn debt with the principle growing at ~1.5T frn per year?  We're adding our entire Au value to our debt every 90 days according to your calculations.

 

Thank goodness for futures contracts!

 

jmo.

COSMOS's picture

Dont worry the Media will make it seem like Apple is booming and get the Pension funds to buy more stock till the trap door collapses.

Fukushima Fricassee's picture
Fukushima Fricassee (not verified) Buckaroo Banzai Nov 2, 2015 10:34 PM

Obama will suk Cook, Obama is a life time member of Man's country Chicago

Buck Johnson's picture

I heard that is what they got on him and why he does what THEY tell them to do.

 

 

yogibear's picture

Frequented bath houses in his younger days. Now he has Air Force one to fly around to his gay meetings.

I am a Man I am Forty's picture

Hey TYLER!!!  TYLER!!  TYLER!!

You forgot this on your timeline from February 2013, BACK WHEN APPLE WAs AROUND $62.  LIKE 125% AGO.

"FOXCONN FREEZES HIRING IPHONE PRODUCTION SLOWDOWN...."

 

http://www.zerohedge.com/news/2013-02-20/foxconn-freezes-hiring-iphone-p...

ZD1's picture

"In fairness to Tim Cook, like most homosexual men, he does spend a lot of time and energy looking to get his cock sucked."

 

Maybe he has to spend a lot of time and energy because there aren't many gay men who want to suck an older man with a limp micro penis--unless they are getting paid well?

Id fight Gandhi's picture

At apple you gotta work from the BOTTOM up.

Chris Dakota's picture
Chris Dakota (not verified) Buckaroo Banzai Nov 2, 2015 11:44 PM

Not only that but gays have to spend at least one hour per day making comments on news articles pointing out how bad gays have been treated in the past.

One hour  denying God and trying to convert others to their #dark-matter-matters religion.

Id fight Gandhi's picture

Sodomy is not love, it's a vice and an evil. It's one of the 4 major sins that cries to God for vengeance.

 

(Anyone wanna name the other 3?)

AdolfSchicklgruber's picture
AdolfSchicklgruber (not verified) Id fight Gandhi Nov 3, 2015 12:21 AM

Defrauding workers of a just wage.

 

Oppression of the poor

 

Murder

 

We live in a country eyeball deep in all of them. How long will God stay His hand from vengeance? 

hannah's picture

the 3 kardasen sisters...? they all love anal...?

VegasBob's picture

Tim Cook strikes me as a nelly princess.  I suspect he'd much rather take cock up his ass than getting his own cock sucked.

ebworthen's picture

Obamacare premiums strike again!

Oh yeah, and:  rent, electricity, natural gas, groceries, other insurance premiums, taxes, lack of income, layoffs...

yogibear's picture

Apple needs to stir up their consumer zombies with lower monthly payments. kind of like subprime auto buyers.

make the payments extremely low and stretch it out years.

Skateboarder's picture

iPoops... they are at the 6th generation. Cost and material "optimization" has made a slimmer, more brittle phone over the years, and after about two generations of iterative fleecing later (the iPhone 4 generation was the peak of iPoops), the customers may be finally starting to wake up to the idea that "hey, it's the same fucking clownshit that they sold last year."

So they've teamed up with service providers to offer things like "your iPhone is free forever - just keep trading it in so long as you pay your phone bill", etc. They do have to show sales somehow.

Wait till the iPoop 7 comes out with one extra bell and half a whistle...

kliguy38's picture

The Clownasssniffers that stand in line for this shitphone will become increasingly laughed at until the final I phone12 has just one last sniffer in line when it goes on sale....then and only then will the CNBS pumpers stop pumping this dead company

Ms. Erable's picture

It's not over until Cook says 'iShit the bed'.

Skateboarder's picture

I hate Apple with a passion for many reasons, and their gayass takeover and shitting all over my childhood hometown of Cupertino, CA fuels the fire a millionfold.

During the course of my electronics engineering job, I grew accustomed to using a Macbook as my primary computer. The 2012 model is a pretty decent piece of hardware, and Parallels is an excellent productivity booster for those who need to work across multiple Windows and Linux environments. Shit just works.

Under the impression that Apple still makes "shit just works" products, I purchased an iPad Mini for my grandparents, so they can "Facetime" their kids and grandkids. I've been trying to make this shit work all morning, trying to make "facetime" work between my Macbook and the iPoop. It does not work, no matter what I try. I've had much better experiences making dissimilar *nix systems come together. What a waste of time...

Anopheles's picture

Cell phone companies in the US and Canada have been backing away from subsidizing phones for the past couple years.    It's now going to up to the phone companies themselves to subsidize their own phones if they want, which for Apple, means lower profits.  

nidaar's picture

Replica iphones are doing pretty good in China actually. Maybe Apple should produce a replica of its own iCrap, that would boost sales for a while...

thegazzman's picture

mark my words there will be billions to made shorting AAPL at the right time

my personal projections are sometime between now and next earnings - the only trick in their arsenal to bring back sales - a larger screen - has been played. watch the chinese phone producers make massive inroads into western markets in the next 12-24 months and subsequently watch AAPLs margins get wrecked.

JenkinsLane's picture

The monthly chart sucks ass.

Freddie's picture

I think the powers that be are levitating AAPL and SPY.  They are all that matters along with the crony zio companies that also get held up like Facebook, AMZN, GOOG and a few others.

The levitation will continue until the end of Obola's term.  They have so much invested in AA obola.

nmewn's picture

And...the high-freq algo's go insane in a milisecond, with Android users from the Hamptons to the Bahamas doing battle with the i-phone users in Bali and Fort Lauderdale via their brokers.

Quite a spectacle, place your bets ;-) 

jerry_theking_lawler's picture

Sheep get sheared...and when there is no wool left they get slaughtered.  Welcome to THEIR market (aka casino).

williambanzai7's picture

Every company that relies on sales of luxury goods to Mainland Chinese now has a problem.

I say this not based on reports from factories or emails from Tim Cook, but observations of luxury brand stores in Hong Kong where 80% of Mainland luxury purchases previous;ly took place.

Uoscale hotel occupation and retail traffic is way down and room rates and rents are being hammered.

Macau Casinos are the new ghost towns.

This is all the primary data one needs to know.

thegazzman's picture

i agree with your synposis

 

although my question is how much of this is related to the graft crackdown (no one wants to be seen flaunting wealth, anyone can be in the party's crosshairs) or is it more related fundamental reasons?

williambanzai7's picture

There are three factors causing this:

1. Anti-corruption crack down and anti-money laundering in PRC (big impact on high roller traffic).

2. HKD pegged to USD so HK is relatively expensive compared to other global cities.

3. Flattening Mainland economy.

I do not think the appetite for high-end phones is satiated. Young Chinese now look at their phones as the most important marker of "face" to the exclusion of traditional items like watches. However, many Mainland Chinese are now learning the meaning of frugality.

 

Freddie's picture

Hopefully that f**k Adelson will go broke.  We can all hope.  He likes funding NeoCons and pretending he was not for Obola.

jcdenton's picture

Whoever is a fan of Adelson here is quite frankly too stupid to live ..

https://youtu.be/jE2_qmlKFVU

joego1's picture

They will masturbate to their lies until the pitchforks are outside the castle walls.

BlindMonkey's picture

Sheldon Adleson must crying in his Matzah ball soup right now.

i_call_you_my_base's picture

The guy making the iphone would have to use two months wages to buy an iphone. I think that might be the issue.

Freddie's picture

Maybe Tim Cook can shove an iPhoney 7 up his ass like that Christopher Walken character in Pulp Fiction.

https://www.youtube.com/watch?v=YFtHjV4c4uw

DirkDiggler11's picture

Yea, the only problem Freddie is Mr Cook would like to have another I-phone shoved up his ass. Tim takes "butt dialing" someone to the next level. Don't even ask about Timmy testing the new IPad's.....

yogibear's picture

Maybe he can come up with an iArouse for his buddies for more sales.

 

dreadnaught's picture

you mean YOUVE already tried it?!

robertocarlos's picture

It has a camera. Call it a medical device and sell it to Obamacare with an appropriate medical equipment markup.

dock3511's picture

I like iPhones. Get off the hate bandwagen. This is a bull shit article.   

Rikky's picture

You're missing the point bub.  This is about a one trick pony who's been doing his dance for a lot longer than most thought starting to get split hooves.  It's astounding they've been able to take a commoditized product and still rack up the kind of revenue and margins thus far, but every good tale must come to its end and unless there's some gotta have it over the horizon this puppy has only one direction to go.

Anopheles's picture

Your description sounds like The Emperor's New Clothes.   Eventually the sheeple wake up. 

That said, the iPhone is a good piece of hardware (I'd never buy one), it's just way overpriced and too proprietary. 

But reality is that Apple is desperate for "the next big thing".   They haven't had a hit for almost 6 years, and that was the ipad.   They tried the iwatch, and now, barely 6 months later,  that iflop went from being sold at exclusive apple boutiques, to being hawked at Best Buy. 

dock3511's picture

LOL, Haters.  So typical.  Apple makes a fine device. They market well. It's called capitalism.  Something you freaks usually support.