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Apple's change in production order for second-generation AirPods Pro has had a major impact on assembler Goertek's finances, with annual revenue down 60%.
Goertek, the audio component maker and assembler of AirPods for Apple, revised down its full-year revenue estimates on Saturday, lowering the numbers significantly. While the company previously expected 4.7 billion yuan ($676 million) for the year, it is now expected to earn just 1.7 billion yuan ($244.4 million) instead.
Shenzhen Stock Exchange documentation seen by SCMP states that a “major overseas customer” asked to suspend production in November. Although the client name is not specified, this client is generally assumed to be Apple.
Goertek does not plan to resume production before the end of 2022.
While production cutbacks can be considered seasonal in preparation for the holiday sales rush, more so than in this case. According to TF Securities analyst Ming-Chi Kuo, this could be “more likely due to production issues rather than demand issues.”
Kuo also claims that after Goertek was asked to halt production in November, Luxshare ICT was asked to increase its own production of AirPods Pro in the suit.
Nearly 90% of Goertek's revenue comes from its top five customers, with Apple accounting for over 40% of total sales, the largest of which.
In its statement, Goertek management is actively communicating with the customer to resolve the issue of ending production. However, there is no official indication as to why this change occurred at all, although it is believed to be due to engineering developments.
This saga once again demonstrates that Apple is quite free to change its requests from suppliers, especially if there are signs of trouble. On Saturday, a report claimed that Apple had been warning suppliers of “fast track plans” to move production out of China following the trouble with Foxconn in Zhengzhou.