"Slowing demand" for Apple products has taken its toll on its Chinese manufacturers. China Daily reported on Monday that a number of Apple's partners there were either laying off or on a hiring freeze because of Apple, but the real reason probably has more to do with firms over-hiring and hyped up sales forecasts than a sign of the end times for China's smart phone market.
The article, published online on Tuesday, cited Shanghai-based Apple contractor Pegatron Technology, which makes the iPhone 6S and iPads. The company's staff has swelled to over 100,000 over the years, but with stagnating to stable sales people are no longer lining up looking for work.
Zhang Libing, a 23-year-old from Anhui province, told the paper that he recently left Pegatron citing long working hours, a perennial complaint of China tech workers. Next to him was a huge electronic screen that kept flashing the message that the company has put on hold all fresh hiring for the time being, the reporters wrote.
"We are not surprised at that," Zhang said. "The sales of iPhone 6S have been disappointing. I am afraid that if we do not leave now, we will be laid off soon."
Competition from domestic brands Xiaomi and Lenovo, plus Samsung, have driven prices lower for Apple products. It's also reduced orders in the retail market. Pegatron was planning to hire roughly 40,000 workers in Shanghai this summer when Apple entrusted it with the iPhone 6S and iPad manufacturing, but the article hinted the hiring was definitely on hold as the almighty Apple has suddenly lost its shine.
Pegatron dismissed speculations that it was struggling to sell the product locally, and added that its operations at the Shanghai plant were "normal".
China Daily reporters may be following the American media's lead in calling a hard landing. According to Apple's figures, China handset sales have surpassed the U.S. for the first time this year and grew 99% from the fourth quarter of 2014.
Moreover, demand for smartphones worldwide is not on the wane.
According to the latest preliminary results from the International Data Corporation (IDC) Worldwide Quarterly Mobile Phone Tracker, vendors shipped a total of 355.2 million smartphones worldwide in the third quarter of 2015, up 6.8% from the 332.6 million units in the third quarter of last year. That makes it the second highest quarter of shipments on record. The third quarter shipments were slightly below IDC's previous forecast of 363.8 million units, largely due to slightly lower than expected iPhone shipments, as well as Android flagship introductions from several top-tier phone makers with price points outside the consumer sweet spot.
Apple's newest iPhones helped drive third quarter shipments of 48.0 million units, up 22.2% from the 39.3 million units last year on a worldwide level. With a record-breaking 13 million iPhone 6S and 6S Plus units shipped during launch week, the two new models continue to capture upgraders and Android converts alike, with China being the number one market.
Apple operates 25 stores in China, making it its second-largest market. The company is planning to grow this number to 40 by mid-2016.
