TSMC and Foxconn revenues up, contrary to dour iPhone supply chain forecasts

Posted:
in AAPL Investors
TSMC and Foxconn, two of Apple's major iPhone production partners, have reported street-beating revenue for November, casting some doubt on supply chain reports suggesting component suppliers are struggling following iPhone production cuts.

Apple CEO Tim Cook at a Chinese Foxconn factory.
Apple CEO Tim Cook at a Chinese Foxconn factory.


Assembly partner Foxconn's revenue in November reached NT$601.4 billion ($19.5 billion), buoyed by the production of new models including the iPhone XS, iPhone XS Max, and iPhone XR. The revenue level was a record for the month and also brings the company's sales growth for the January to November period to almost 16 percent.

Apple A-series chip producer TSMC achieved NT$98.4 billion ($3.2 billion) in sales for the month, representing a year-on-year growth of 5.6 percent, reports Bloomberg. While there is some reduction in growth from October, this is said to be a solid level of revenue for the chip maker.

The revelations from two key companies in the iPhone supply chain are highlights in a supply chain supposedly feeling the pinch of iPhone production cuts from Apple, as it revises its output to more closely meet demand. Suppliers including AMS, Japan Display, Lumentum, Qovrvo, and others all slashed their forecasts in November and warned of weaker earnings.

The positive revenues are also notable due to the high level of income each company has from their dealings with Apple, with Foxconn estimated to earn close to half its revenue from Apple while the iPhone maker accounts for a fifth of TSMC.

In the case of TSMC, it is somewhat insulated from Apple-ordered cuts, due to reports it has a queue of other clients wanting to take advantage of its 7-nanometer chip fabrication process. Already working with Huawei, it is believed TSMC also counts Qualcomm and AMD as customers for 2019, alongside Apple, with Broadcom, Xilinx, and Nvidia also tipped to tap the company.

Foxconn's high Apple-based revenue may be an issue in the future if the cuts get deeper, due to it having relatively thin margins for production. Flat unit growth for iPhone can hurt revenue growth for Foxconn in the long run, as it benefits less from the high average selling price levels currently observed for iPhones.

The assembly partner is also having to deal with the ongoing trade war between the U.S. and China, with the company reportedly exploring the possibility of shifting some iPhone production to avoid the effects of tariffs.

Many analysts have mused on Apple's fortunes, with share price target cuts across the board citing the slowdown of iPhone unit sales and the general slump in the smartphone market.
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Comments

  • Reply 1 of 24
    Whaaaaaat?  This is un-possible!

    Apple is doomed anyway!  Because, reasons!

    /s
    andrewj5790radarthekatStrangeDaysAppleExposedadamcwatto_cobrajony0
  • Reply 2 of 24
    These facts can’t be. The analysts and the 9to5 comments section said the iPhone was way too expensive because bean counter Tim Cook... and Steve is no more... and .... and... and.... 🙄🙄🙄
    radarthekatStrangeDaysAppleExposedadamcwatto_cobrajony0
  • Reply 3 of 24
    avon b7avon b7 Posts: 4,302member
    These facts can’t be. The analysts and the 9to5 comments section said the iPhone was way too expensive because bean counter Tim Cook... and Steve is no more... and .... and... and.... 🙄🙄🙄
    AFAIK, the rumours of lower than expected sales were relative to the newest models.

    There have been other rumours claiming the older models were pulling up the slack.


    78Bandit
  • Reply 4 of 24
    Since when do companies publicly report revenues on a monthly basis? Is that typical?
    gatorguy
  • Reply 5 of 24
    lkrupplkrupp Posts: 7,464member
    Inconceivable!





    watto_cobra
  • Reply 6 of 24
    brucemcbrucemc Posts: 1,540member
    But...but....but...
    watto_cobra
  • Reply 7 of 24
    Mike WuertheleMike Wuerthele Posts: 5,006administrator
    Since when do companies publicly report revenues on a monthly basis? Is that typical?
    Depends on the market, but for TSMC and Foxconn, yes.
    watto_cobra
  • Reply 8 of 24
    gatorguygatorguy Posts: 21,297member
    As the AI article says, TSMC's November revenues may not tell us anything at all regarding Apple:
    "the iPhone maker accounts for a fifth of TSMC. 

    In the case of TSMC, it is somewhat insulated from Apple-ordered cuts, due to reports it has a queue of other clients wanting to take advantage of its 7-nanometer chip fabrication process. Already working with Huawei, it is believed TSMC also counts Qualcomm and AMD as customers for 2019, alongside Apple, with Broadcom, Xilinx, and Nvidia also tipped to tap the company"

    Foxconn on the other hand.... 

  • Reply 9 of 24
    NT$601.4 billion is a 5.6% YoY increase for Foxconn for November. That's the smallest YoY increase Foxconn has seen since March and its last 6 monthly YoY increases had all been above 20%. So while it's good that Foxconn saw growth in November, I wouldn't read too much into that when it comes to how well iPhones are selling relative to what had been been expected. (I, of course, am not suggesting that they aren't selling as well as had been expected.)
    78Banditgatorguy
  • Reply 10 of 24
    gatorguy said:
    As the AI article says, TSMC's November revenues may not tell us anything at all regarding Apple:
    "the iPhone maker accounts for a fifth of TSMC. 

    In the case of TSMC, it is somewhat insulated from Apple-ordered cuts, due to reports it has a queue of other clients wanting to take advantage of its 7-nanometer chip fabrication process. Already working with Huawei, it is believed TSMC also counts Qualcomm and AMD as customers for 2019, alongside Apple, with Broadcom, Xilinx, and Nvidia also tipped to tap the company"

    Foxconn on the other hand.... 

    Don’t you know the rules?

    Apple supplier down? It’s because of Apple sales faltering.

    Apple supplier up? It’s because other companies sales are up. Apple is still down. 
    StrangeDaysretrogustobackstabwatto_cobrajony0
  • Reply 11 of 24
    avon b7 said:
    These facts can’t be. The analysts and the 9to5 comments section said the iPhone was way too expensive because bean counter Tim Cook... and Steve is no more... and .... and... and.... 🙄🙄🙄
    AFAIK, the rumours of lower than expected sales were relative to the newest models.

    There have been other rumours claiming the older models were pulling up the slack.
    Oh, well thank god you have rumors to explain the rumors to support the bad news. 
    AppleExposedtmayericthehalfbeeRonnnieOJWSCwatto_cobra
  • Reply 12 of 24
    AppleExposedAppleExposed Posts: 1,689unconfirmed, member
    Guys.... try not to laugh:


  • Reply 13 of 24
    carnegie said:
    NT$601.4 billion is a 5.6% YoY increase for Foxconn for November. That's the smallest YoY increase Foxconn has seen since March and its last 6 monthly YoY increases had all been above 20%. So while it's good that Foxconn saw growth in November, I wouldn't read too much into that when it comes to how well iPhones are selling relative to what had been been expected. (I, of course, am not suggesting that they aren't selling as well as had been expected.)
    It's a simple mathematical proof the YoY increases are never sustainable. Why? Because YoY increase is an exponential function. Substantial variation, including declines are normal and natural. If you don't see this variation, someone is cooking the books. 
    watto_cobra
  • Reply 14 of 24
    Rayz2016Rayz2016 Posts: 4,788member
    avon b7 said:
    These facts can’t be. The analysts and the 9to5 comments section said the iPhone was way too expensive because bean counter Tim Cook... and Steve is no more... and .... and... and.... ߙ䰟鄰
    AFAIK, the rumours of lower than expected sales were relative to the newest models.

    There have been other rumours claiming the older models were pulling up the slack.
    Oh, well thank god you have rumors to explain the rumors to support the bad news. 

     :D :D :D

    Priceless!

    It's hilarious how the naysayers are happy to accept bad numbers from suppliers as the gospel truth proving Apple is going down, and how fast they are to seek alternative facts to explain how Apple must still be going down while the suppliers are going up!

    The truth is that Foxconn makes lots of devices for lots of companies, so their figures don't prove anything either way, but don't tell the doom-mongers that. 
    edited December 2018 tmayStrangeDays78Banditwatto_cobraMacPro
  • Reply 15 of 24
    larryjw said:
    carnegie said:
    NT$601.4 billion is a 5.6% YoY increase for Foxconn for November. That's the smallest YoY increase Foxconn has seen since March and its last 6 monthly YoY increases had all been above 20%. So while it's good that Foxconn saw growth in November, I wouldn't read too much into that when it comes to how well iPhones are selling relative to what had been been expected. (I, of course, am not suggesting that they aren't selling as well as had been expected.)
    It's a simple mathematical proof the YoY increases are never sustainable. Why? Because YoY increase is an exponential function. Substantial variation, including declines are normal and natural. If you don't see this variation, someone is cooking the books. 
    Of course you’d expect variation in YoY growth rates. And if we were talking about comparing YoY growth for a given month to previous YoY growth for the same month, then what you say about exponentiality would apply.

    But here we’re talking about comparing YoY growth for a given month to YoY growth for different months in the same year. So they could all be fairly large numbers without exponentiality coming into play. It’s 25% more than A, and 25% more than B, and 25% more than C, and 25% more than D rather than 25% more than 25% more than 25% more than 25% more than A.

    When looking at revenue or income growth, we often compare YoY changes sequentially. For instance, if the YoY revenue growth for the third quarter is less than the YoY revenue growth for the second quarter, we might say that revenue growth is slowing.

    That said, again, I’m not suggesting that this data points to worse-than-expected iPhone sales. But it also doesn’t necessarily mean good-as-expected iPhone sales. Something was causing very strong (YoY) revenue growth for Foxconn for each of the preceding 6 months and then didn’t cause very strong (YoY) revenue growth for November.
    gatorguy
  • Reply 16 of 24
    Guys.... try not to laugh:


    Not worth giving that non-producer the click impressions.
    watto_cobra
  • Reply 17 of 24
    What is the latency between orders placed by Apple to when suppliers build the products and they get paid? Which of the various GAAP accounting practices do the suppliers use to recognize income?
  • Reply 18 of 24
    avon b7avon b7 Posts: 4,302member
    avon b7 said:
    These facts can’t be. The analysts and the 9to5 comments section said the iPhone was way too expensive because bean counter Tim Cook... and Steve is no more... and .... and... and.... ߙ䰟鄰
    AFAIK, the rumours of lower than expected sales were relative to the newest models.

    There have been other rumours claiming the older models were pulling up the slack.
    Oh, well thank god you have rumors to explain the rumors to support the bad news. 
    That was the whole point. Reacting to rumours is only that - reacting to rumours. Whichever way they go.
    edited December 2018
  • Reply 19 of 24
    JWSCJWSC Posts: 552member
    What is the latency between orders placed by Apple to when suppliers build the products and they get paid? Which of the various GAAP accounting practices do the suppliers use to recognize income?

    That would vary by contract.   Nominally, suppliers are paid when items are received by the buyer.  But Apple has long term agreements in place with their major suppliers.  Some of these agreements involved Apple providing up-front cash to build out factory production lines to secure priority shipments.  That up-front cash may or may not have included lot shipments of said items.  We’ll never know because Apple considers that competitive intelligence that they would not want others to know.

    watto_cobra
  • Reply 20 of 24
    adamcadamc Posts: 580member
    avon b7 said:
    These facts can’t be. The analysts and the 9to5 comments section said the iPhone was way too expensive because bean counter Tim Cook... and Steve is no more... and .... and... and.... 🙄🙄🙄
    AFAIK, the rumours of lower than expected sales were relative to the newest models.

    There have been other rumours claiming the older models were pulling up the slack.


     I didn’t know these companies are still making chips to be used in those older models of the iPhones. 
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