Electronics giant Foxconn plans deep cuts

Foxconn Technology Group, the giant Taiwanese electronics assembler, aims to cut $2.9 billion, or about 43 percent, from expenses in 2019 as it faces "a very difficult and competitive year," a company memo said.

The company's iPhone business, one of its largest, will need to reduce expenses by $860 million next year. Foxconn plans to eliminate about 10 percent of nontechnical staff, according to the memo obtained by Bloomberg. The company's spending in the past 12 months was about $6.7 billion.

"The review being carried out by our team this year is no different than similar exercises carried out in past years to ensure that we enter into each new year with teams and budgets that are aligned with the current and anticipated needs of our customers, our global operations and the market and economic challenges of the next year or two," Foxconn said in an e-mailed statement in response to Bloomberg queries.

Foxconn's moves are likely to add to the gloom enveloping Apple and suppliers for the iPhone, its most important product. Just last week, four suppliers on three continents cut their revenue estimates because of weak demand. That set off a rout in technology stocks that has spread to the broader market in recent days.

Goldman Sachs cut its price target for Apple for the third time this month because of weak iPhone demand in China and other emerging markets. Analyst Rod Hall warned of "material risk" to guidance if the current trends continue.

Apple dropped into bear market territory Tuesday, closing more than 20 percent below its October peak. On a single day last week, Lumentum Holdings Inc., one of the suppliers that warned of soft demand, plunged 33 percent, while AMS AG tumbled 22 percent. This week, as concern spread, the S&P 500 erased its gain for 2018.

Taipei-based Foxconn assembles everything from iPhones and laptop computers to Sony Corp. PlayStations at factories in China and around the world. The company is building a display-panel manufacturing plant in Wisconsin, its first U.S. factory, that for now is scheduled to open in 2020.

The company will conduct an in-depth review of managers with an annual compensation of more than $150,000, according to the memo. Other cuts include a planned 3 billion yuan reduction in expenses at Foxconn Industrial Internet Co., its Shanghai-listed offshoot.

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.