While there are reasons to be cautious about reading too much into these results, it is near-certain that they give at least some clue as to Apple’s current fortunes …
We learned last week that Apple’s main iPhone assembler, responsible for more than 80% of the world’s iPhone production, reported a significant fall in last month’s revenue.
Foxconn revenue for March was reported today, and revenue for the iPhone assembler shows a year-on-year fall of 21.1%. The company says that it also expects a decline during the current quarter.
TSMC revenue drop
Bloomberg reports a “sharp” drop in TSMC revenue in the same month.
First-quarter revenue at the world’s biggest contract manufacturer of chips was NT$508.6 billion ($16.7 billion), according to Bloomberg calculations, falling shy of average analyst forecasts of NT$525.5 billion. A sharp slowdown in March contributed to that miss: sales were down 15% last month relative to the prior year, at NT$145.4 billion, TSMC said.
Like Foxconn, TSMC also expects things to get worse before they get better. The company says that the revenue drop is expected to continue in the current quarter, before recovering in the second half of the year. It does, though, expect the negative growth in this quarter to be smaller – in the “mid-to-high single digits.”
The report blames reduced demand on interest rate increases, high inflation, and the banking crisis – all of which contribute to consumers feeling anxious about their future financial stability, and less willing to spend money on discretionary items like new iPhones.
With Apple reporting its own earnings quarterly rather than monthly, analysts tend to rely on monthly reporting from major Apple suppliers like Foxconn and TSMC to provide some kind of steer on how the Cupertino company is currently faring.
Apple has cautioned against reading too much into supply chain reports, as it typically has multiple suppliers, and can shift orders between them. We would also note that both companies here work for other large consumer electronics companies also, so their revenue is not exclusively tied to Apple.
However, given that Foxconn makes the vast majority of iPhones, and TSMC is Apple’s exclusive chipmaker for its A-series and M-series chips, it’s a pretty safe bet to conclude that at least part of their falling sales reflects lower demand for Apple products year-on-year.
We’ll learn the actual position when AAPL reports its earnings on May 4.
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