Production problems lead Foxconn to disappointing July earnings

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Despite its role as a manufacturer for the eagerly-anticipated iPhone 6, Apple manufacturer Foxconn has announced July as being responsible for its lowest monthly earnings since March 2013.

Surprisingly this comes not long after Foxconn posted record earnings of $131.82 billion for 2013, while company chairman Terry Gou claimed that this year’s earnings would be even greater. Nonetheless the company’s consolidated revenues of just (!) $8.66 billion for the month of July represents a decrease of 17.91 percent on month, and 13.3 percent year-on-year.

So what’s responsible for the drop?

Although Foxconn doesn’t (for obvious reasons) spill the beans regarding what it’s currently working on, it does note that the disappointing revenue is the result of decreased shipments of consumer electronics, related to the complexity of assembly for new products which has made large-scale volume production difficult.

Hopefully this is set to turn around soon, however, since Foxconn has reportedly adjusted its production lines and capacities to increase yield rates and overall equipment efficiency. A source noted that it took time for Foxconn to reach optimal operation for its new production lines.

Of course, there’s no guarantee that this relates to the iPhone 6 or any Apple product, but we’ve certainly heard plenty of stories regarding production challenges with the next generation iPhone. Since Foxconn is the company assigned to produce the larger 5.5-inch iPhone 6 (the device most of the delay reports have concerned) along with the smaller 4.7-inch variant, this could have something to do with Apple’s debut into the larger “phablet” market.

Apple analyst Ming-Chi Kuo recently claimed that both the 4.7-inch and 5.5-inch models Apple have suffered from production problems related to the devices’ in-cell touch panel production, and also low-yield casing and chassis problems.

Last month Foxconn announced that it was planning to use an army of production robots — each one capable of building up to 30,000 Apple devices — as part of its production line.

Hopefully Foxconn can overcome whatever production problems it’s currently experiencing, since plenty of other suppliers working on the iPhone 6 seem to be doing very well from Apple’s most eagerly anticipated handset refresh in years.

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About the author

Luke DormehlLuke Dormehl is a UK-based journalist and author, with a background working in documentary film for Channel 4 and the BBC. He is the author of The Formula: How Algorithms Solve All Our Problems, And Create More and The Apple Revolution, both published by Penguin/Random House. His tech writing has also appeared in Wired, Fast Company, Techmeme, and other publications. He'd like you a lot if you followed him on Twitter.

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