In Manufacturing Moves, Foxconn Follows the Money

The Daily Observations

Talk of a pricier iPhone 15 Pro, Foxconn says manufacturing moves are just business, and teasing a mixed reality.

In Manufacturing Moves, Foxconn Follows the Money

Think Foxconn’s manufacturing moves out of China are politically motived? COVID-related? Some sort of moral stance? Foxconn chairman Young Liu says it’s just business. 

The contract manufacturer and Apple production partner held an earnings call Wednesday. While roughly “70% of Foxconn’s revenue comes from China,” that will change. The Wall Street Journal (via Apple News) had Foxconn’s chairman saying on the call, “It is a basic truth that labor-intensive industries transfer to low [gross domestic product] countries…” The piece went on to say:

These economies grow with the development of the labor-intensive industries, which in turn triggers another round of transfers, he said, referring to the past migration of such production from the U.S. to Japan, then to Taiwan, then to mainland China.

“These high GDP countries must upgrade their industries in order to support the sustainable development of a high GDP society,” [Liu] said.

Hence Foxconn’s expansion in Mexico, Vietnam, and anticipated expansion in India (and India). 

Near Term Negativity on Consumer Side

As for the earnings part of the earnings call, not great and not great going forward. At least not on the consumer side. A piece from AppleInsider had Foxconn reporting a 10% decline last quarter versus the same quarter a year earlier. 

On the call, Young Liu said he and his “maintain a relatively conservative view towards the smart consumer electronics, and think they might decline slightly.” Such pessimism is due to inflation and a slowing global economy, according to the piece. That said, the chairman indicated that Foxconn expects “overall computing demand to rise,” specifically for “its cloud, networking, and component products.”

Haitong Analyst Expects Prices for iPhone 15 Pro to Increase

Everything’s getting more expensive — maybe even one of the most expensive phones you can buy. A headline from MacRumors says, “iPhone 15 Pro Predicted to See First Price Increase Since iPhone X.” 

Well — in the U.S. and China, anyway. “Outside of the U.S.,” The piece points out:

…Apple has increased the prices of iPhones multiple times in recent years, largely due to foreign currency fluctuations. In the U.K., for example, the iPhone 14 Pro starts at £1,099, compared to £949 for the iPhone 13 Pro.

This would not be that, though. This prediction is based on a note from Haitong International Securities analyst Jeff Pu. He thinks the next Pro phone’s anticipated innards, “including a titanium frame, solid-state buttons with haptic feedback from extra Taptic Engines, an A17 Bionic chip, increased RAM, a periscope lens for increased optical zoom on the Pro Max model, and more” will drive the prices higher.

The piece says this is the second time higher prices have been predicted for the next round of Pro iPhones. That said, it feels like this is a worry/belief expressed every year — right up until Apple says, “still starting at $999,” or words to that effect. 

I’m not saying it’s not gonna happen. Everything’s getting more expensive. Still — it feels like we’ve heard this one before. Maybe don’t assume the prices are going up, but don’t be surprised if they do. 

Efficiency, Low Headcount Keep Apple Layoffs at Bay

Another “how has Apple avoided layoffs” story today. We heard yesterday of a reported cooling in terms of hiring for the Cupertino-company. Secret peeps tell Bloomberg that the company is implementing a few cost control measures. They include a close eye on budgets, limiting travel, a change in the bonus pay schedule, and — in many cases — not filling positions left vacant. 

None of that sounds fun, though it does sound better than the tens-of-thousands of jobs lost across the tech sector over the past several months. And so, the question posed this time by Barron’s (via Apple News) — how has Apple avoided layoffs? There are two answers in the piece: efficiency and not having too many people to begin with, which ties back to the efficiency.   

On the people part, Barron’s cites a note from Evercore. According to that, “Apple never hired aggressively through the pandemic and doesn’t need to go through extensive head count reductions unlike peers.” It’s kind of funny though. It’s unclear from the Evercore bit who Apple’s peers would be. While the Barron’s piece juxtaposes the lack of layoffs at Apple with layoffs at Facebook parent Meta, Evercore says analysts there “continue to think consumer staples and/or high-end luxury companies remain the relevant peer group for Apple.” 

So, is anybody reporting on the number of layoffs from Tiffany?

As for Apple’s efficiency — a figure that is kind of grotesque. Quoting Barron’s:

Apple generated around $2.4 million in revenue per employee in its latest fiscal year and has averaged around $2.1 million on the same metric over the past five years, according to FactSet. 

As for the hard times Facebook has faced, Meta “generated $1.35 million in revenue per employee in 2022—below its five-year average of $1.5 million.” 

If this was video I’d do a spit take. Making only $1.35 million in revenue per employee means having to fire tens-of-thousands of people? 

I weep for the present.

Apple Makes More Developer Betas Available

Apple’s syncopated beta releases continue. I told you yesterday that Apple had released the fourth developer beta of tvOS 16.4 — all on its little lonesome. Now, here comes everybody else. MacRumors hit with a few posts Wednesday. One announced the fourth developer betas of iOS and iPadOS 16.4. Another heralded the arrival of the fourth developer beta of macOS Ventura 13.3. And — not to be left out — yet another hipped developers to the availability of the fourth beta of watchOS 9.4. 

Maybe it’s not syncopated. Maybe the tvOS beta simply jumped the gun.

One more out there to tell you about — perhaps the most unusual of the bunch. A piece from AppleInsider says “Apple has released the fourth Studio Display firmware beta for version 16.4.” According to the report:

Users with the beta installed on a Mac connected to the Studio Display will get prompted to install the monitor’s fourth beta for version 16.4.

Latest Apple Source Code on GitHub References realityOS

And finally today, the Apple headset OS snipe hunt continues. Flip a coin from day-to-day and the operating system for Apple’s anticipated mixed reality device is either called “realityOS” or “xrOS.” Flipping the coin Wednesday, it came up “reality.” 

9to5Mac has word of two signs of Apple’s MR adventure. “As shared by Aaron on Twitter,” the site says Apple on Wednesday:

…updated its source code available for developers on GitHub. (…), the latest open source code from the company mentions “realityOS” and “Reality Simulator” along with currently existing platforms such as iOS, macOS, and watchOS.

What happened to “xrOS?” Good question. Relatively recent reports from Bloomberg had indicated that “x” marked the sport to which Apple was moving. 9to5 says that name “would be a reference to ‘extended reality,’” which the piece says “makes sense when considering the whole idea of integration between AR and VR.” At the same time, Apple has registered a number of seemingly related trademarks, including “Reality One,” “Reality Pro,” and “Reality Processor,” which makes realityOS seem more real. 

Curious which way the coin will land tomorrow.

Today on The Mac Observer’s Daily Observations Podcast

TMO Managing Editor Jeff Butts and I can not help falling into the realityOS trap — because one of us is a junkie. I won’t say which. Plus — Jeff’s spotted news of a smart car  he’s excited to talk about because it’s not depressing. That’s all today on the Daily Observations Podcast from The Mac Observer.

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