ASUS Lowers Q2 Revenue Goal As Smartphone Demand Drops

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Taiwanese consumer electronics manufacturer Asustek Computers isn't too optimistic about the immediate future of the smartphone industry as the Taipei-based company just cut down its latest revenue target for the second quarter of this year due to weakening demand for new smartphones. Namely, the company's new target for Q2 2016 now amounts to 90 to 95 Billion New Taiwan dollars, roughly 2.93 to 3.09 Billion US dollars. ASUS originally expected to record revenue between NT$95 to NT$100 billion in this period. Although the weakening demand for new smartphones is the primary reason for this reduction, it's worth noting that ASUS believes the demand is getting lower only in the Asia-Pacific market while not expecting any significant drops in other regions. Of course, given how this part of the world is a home to close to 4.5 billion of people, i.e. 60% of the planet's population, the weakening demand for smartphones in countries like China, India, Japan, South Korea, and Taiwan can definitely be more than impactful on global revenue of multinational companies like ASUS.

Even though it's reducing its revenue forecast for the second quarter of the year, the Taiwanese company explicitly stated that it's still expecting its operating profit margin for the said period to be between 4 and 4.5%, exactly as originally predicted. This announcement is not completely unexpected as ASUS has already lowered its 2016 smartphone shipment goal from 30 to 25 million units in February. Back then, the company cited numerous delays of the ASUS ZenFone 3 launch as the main reasons behind its reduction but has also acknowledged the weakening smartphone demand in some of its target markets.

Furthermore, the Taiwanese tech giant announced that it's planning to release several new flagship smartphones and high-end notebook computers in the third quarter of this year. The company's reasoning for this decision lies in the fact that ASUS is doing everything it can to increase the average selling price (ASP) of its products while also indirectly raising its operating efficiency through resource allocation. In other words, it's more profitable to manufacture premium, high-end products than mid-range and low-end devices and ASUS is planning on becoming more profitable based on precisely that fact in Q3 2016.

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Dominik started at AndroidHeadlines in 2016. He’s approaching his first full decade in the media industry, with his background being primarily in technology, gaming, and entertainment. These days, his focus is more on the political side of the tech game, as well as data privacy issues, with him looking at both of those through the prism of Android. Contact him at [email protected]

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