Market saturation and profit reduction make Apple’s partners in Asia simultaneously shift to Big Data and AI

the last decade. According to International Data Corporation (IDC), with 151.4 million devices in 2008, the number of smartphones was shipped annually increasing by 1.465 billion compared to the figure of the last year.

However, last year, smartphone shipments dropped for the first time since a year ago. This figure was decreased by 0.3 percent. More noticeably, the number of smartphones shipped this year also continues to decline. In the first quarter of the year, smartphone shipments worldwide fell 2.9% over the same period in 2017 and dropped 1.8% in the following quarter. It is estimated that the number of smartphone shipments is likely to fall more.

Compared to last year, Apple, the world’s most profitable smartphone manufacturer, shipped only 1 percent of the iPhone in the 2nd quarter. The second place in the global smartphone market of Apple belonged to Huawei. As a result, the revenue of key iPhone’s component suppliers, such as Foxconn and Pegatron, had also been affected. It is known that Foxconn and Pegatron assemble more than 200 million iPhones each year.

In the last quarter, Foxconn’s profit was $517 million. This figure was lower than 36.52% a year ago. Its profit margin was only 1.47%, equal to a decrease of 1.24%. Pegatron’s earnings were even worse. It was down 62.7% while the profit margins reached 0.60%. It meant that this company had lost 1.2% of revenue.

FIH Mobile, a subsidiary of Foxconn’s Android smartphone maker, also suffered a loss earlier this year with profit margins falling from -4% to -5.2%. In addition, Inventec, the maker of Xiaomi smartphones dropped to 1.7 percent, in the period from April to June.

Other component suppliers are also negatively affected as the market gets narrower and competition is increasing. The profit margin of the metal frame maker Catcher Technology, the sensor module supplier TPK Holding, the supplier of the Japan Display and LG Display panels, was lower than last year. What’s more, the Sonny Optical Technology Group and AAC Technologies Holding also did not escape the slump. Meanwhile, Q Technology, another camera module maker experienced a similar loss in the first half of this year.

Over the past several years, the smartphone industry has exploded and the PC industry has fallen into recession. Before the smartphone dominated, the PC industry played an important role in the consumer electronics market. Since 2012, the global PC sales have plunged for 6 years. Fortunately, the scale of the decline has been narrowed for the 2 recent years. In 2017, the demand for commercial PCs and gaming PCs stabilized. This helped PC sales reach $259.52 million, just down 0.2 percent.

However, the sluggishness of the PC industry still has serious implications for vendors whose PC components account for more than 50 percent of revenue. Last quarter, the main MacBook vendor, Quanta Computer, dropped nearly 40 percent in profits over the same period last year. Compal Electronics, Lenovo’s PC component supplier, also fell 30 percent after deducting 2.9 billion Yuan in bad debt in the second quarter in 2017.

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