Apple Inc’s biggest iPhone assembler Foxconn is seeking to cut 20 billion yuan ($2.88 billion) from expenses in 2019 as the company faces "a very difficult and competitive year", Bloomberg reported on Wednesday.
The iPhone business will need to reduce expenses by 6 billion yuan next year and the company plans to eliminate about 10 percent of non-technical staff, according to an internal memo obtained by Bloomberg. The company’s spending in the past 12 months is about NT$206 billion.
The Taiwan-based producer said in a statement it was conducting a regular annual review to budget effectively for 2019, but it was also the latest to point to concerns over demand for Apple’s flagship devices.
Earlier this month, Apple announced a lower-than-expected sales forecast for the Christmas quarter that jolted parts suppliers across the world.
iPhone component suppliers including U.S. chipmaker Lumentum and Japan Display have already cut forecasts following warnings from financial advisors.
Foxconn said it regularly reviews its operations to reallocate resources across its operations.
Nikkei daily reported earlier this month that Apple had told Foxconn and rival Pegatron Corp to halt plans for additional production lines dedicated to the iPhone XR.
Analysts estimate that Apple cut orders to its Taiwanese suppliers by 20-30 percent earlier in November, mainly because of weak demand for the iPhone XR and XS Max.
Apple has adjusted its strategy as growth in the number of smartphones sold each year has slowed. It can charge higher prices for each handset and pull in more money from services, including digital videos, streaming music and data storage.