Why Quanta Might Ditch Apple Watch Assembly Orders

While Apple continues to enjoy Apple Watch sales, Quanta Computers, a company that assembles the popular wearable for the tech giant, is worried about its profits and is likely to stop taking orders from the Cupertino-based company, a report says.

According to a report from DigiTimes, Quanta's “thinning profitability” is likely to cause the company to ditch Apple's orders for Apple Watches. It is expected to stop taking orders from Cupertino in 2020.

The report added that the company might even resort to selling the manufacturing plant dedicated to assembling the Apple Watch, which ultimately means it won't produce Apple's health-focused wearable anymore. The plant, which is based in Changshu city in the eastern-central Chinese province of Jiangsu, will be sold to help with the company's profit concerns.

Irony

While Quanta is still considering ways how to deal with its profit concerns, Apple is simply seeing more and more Apple Watches being sold in the market.

According to the latest data from Strategy Analytics (as per iPhoneHacks), Apple has already taken a huge 46% share in the global smartwatch market in the second quarter of 2019. It was able to ship 5.7 million Apple Watch units across the globe during Q2, indicating a 50% year-on-year increase.

Of the 12.3 million smartwatch units that were shipped to all countries around the world in the second quarter of this year, 5.7 million of them were from Apple. The data reveals that the Cupertino tech giant is well ahead of the competition in the smartwatch market.

Not the first supplier

Quanta isn't the first company involved in the Apple Watch to have concerns with profitability. Earlier, Apple Watch display provider LG Display also suffered from losses while producing the displays used in the best-selling Apple-branded health-focused wearable in the market.

LGD reportedly mulled closing its E2 OLED display factory in Paju in Gyeonggi Province to deal with its losses that amounted to a total of 501 billion won ($421 million USD). Unlike Quanta, however, LGD didn't stop taking orders from Apple; it merely planned to transfer production to other plants such as the E5 plant used to manufacture OLED panels for smartphones and cars.