Quanta Computers, the company that assembles Apple Watch is likely to stop taking orders from Apple. According to a report by Digitimes, the company is also planning to sell its manufacturing plant located in Changshu, China. The manufacturing plant is specifically meant for the Apple Watch assembly.
The report is paywalled and the preview reads as follows,
“Quanta may stop assembly for Apple Watch in 2020, say sources:
Quanta Computer is likely to stop taking assembly orders for the Apple Watch next year due to profit concerns, and may sell its Changshu plant in China dedicated to assembling the wearable device, according to industry sources.”
On the other hand, the latest data from Strategy Analytics points to Apple Watch taking a staggering 46% of the smartwatch share in Q2 2019. The Cupertino company shipped a staggering 5.7 million Apple Watch units worldwide in Q2 marking a 50% YoY increase. In total, 12.3 million smartwatches were shipped in Q2 2019 and Apple shipped 5.7 million of them. The strong sales of the Apple Watch mean that it is notably ahead of its competitors and absolutely dominates the wearable market.
Needless to say, Apple’s wearable business is growing and yet Quanta Computers is planning to stop taking assembly orders. In all likelihood, the margin might have reduced in the recent past. It will be interesting to see how companies will absorb new import duties. As reported earlier, Apple Watch, AirPods, HomePod are subjected to a 10 percent hike in import tariffs. In the long run, Apple will not be able to absorb the impact of newly imposed import duties and might eventually pass it on to the consumers.