Apple chassis supplier posts Q1 losses

Casetek reported gross margins of negative 12.48%, and negative 28.65% operating profit.

What you need to know

• Apple's manufacturing partner Pegatron has posted operating losses for Q120.
• Losses are mainly down to its subsidiary Casetek.
• Casetek supplies chassis for MacBook and iPad, but its factories were hit hard by the pandemic.

Apple manufacturing partner Pegatron has posted operating losses for Q120, which is says are mainly down to losses of its subsidiary, Casetek.

As reported by DigiTimes:

Pegatron has reported operating losses of NT$282 million (US$9.4 million) for the first quarter of 2020 with company chairman TH Tung noting that the losses were primarily from its chassis subsidiary Casetek Holdings.

The company's chairman TH Tung said that Pegatron's "core design, manufacturing, and service businesses were still profitable," but that a number of factors contributed to the loss. They include changes to capacity usage at plants in China due to COVID-19, the expense of keeping some workers in post over the Lunar holiday, and recruitment drives following labor shortages after the break.

Specifically, Casetek, which supplies chassis for Apple's MacBook and iPad, reported a gross margin of negative 12.48% and operating profit of negative 28.56. This is down sharply from the previous quarter, and is attributed to "declines in the utilization rates of the company's factories in China as a result of the coronavirus pandemic."

The report further notes that Casetek has been unable to expand to the more lucrative iPhone supply chain because iPhone shipments are waning, meaning there is less work to go around. The company expects a big jump in revenue for April, growing 36.84% on the previous month, and 32.14% year on year.

The results reflect the overall arc of decreased demand for Apple's products and supply chain disruption caused by the virus. The brighter outlook going forward also reflects Apple's reopening of some stores across the world, and increased demand for laptops and tablets from people working and learning remotely.

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