Foxconn to maintain research spending despite falling iPhone demand

Terry Gou, the chairman of Foxconn Technology Group, said the biggest assembler of iPhones isn’t cutting research and development spending as demand for the smartphones cools.

“No matter how stupid we are, we are certainly not cutting research and development expenses” Gou said in an interview outside a polling station in Taiwan, where electors are voting in local elections. “Our business is very good up till at least January.”

An internal memo obtained by Bloomberg News earlier this week said the contract manufacturer aims to cut 20 billion yuan ($2.9 billion) from expenses in 2019 as it faces “a very difficult and competitive year.”

Foxconn’s iPhone business will need to reduce expenses by 6 billion yuan next year and the company plans to eliminate about 10 percent of non-technical staff, according to the memo. The moves are likely to add to the gloom enveloping Apple Inc. and suppliers for the iPhone, its most important product. Four suppliers on three continents last week cut their revenue estimates because of weak demand.

Gou dismissed speculation the company will eliminate tens of thousands of jobs.

“There has been speculation that we are cutting about 100,000 staff. We won’t,” he said.

Now read: Apple supplier Foxconn signals deep cuts as iPhone demand wanes

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Foxconn to maintain research spending despite falling iPhone demand