Apple’s biggest supplier suffers disappointing Q1 profits

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Foxconn
Foxconn was down 17.7% from the same quarter one year ago.
Photo: CBS

Foxconn is Apple’s biggest supplier, and the world’s largest contract manufacturer. However, that wasn’t enough to stop it from underperforming in its latest quarterly earnings.

The company, whose official title is Hon Hai Precision Industry, reported net profits of T$19.82 billion ($637.26 million) for the first three months of 2019. That might sound good, but it’s down 17.7% from the year-ago quarter.

The figure was considerably lower than the T$24.84 billion average that analysts had been expecting. Foxconn, like fellow suppliers including Japan Display (which also reported disappointing numbers today), is suffering due to a decline in smartphone demand.

Shares in Foxconn fell by 2% as a result of the lower-than-expected earnings.

Challenges for Foxconn

Foxconn is currently facing a couple of challenges or upheavals. One is the departure of founder Terry Gou, who plans to run for the position of president of Taiwan. Foxconn is also being scrutinized in the U.S. This is because its claims that it will create thousands of jobs with a new Wisconsin factory have not yet materialized. Foxconn’s behind-the-scenes dealings suggest that it may be trying to renegotiate terms.

Interestingly, while Apple suppliers are all struggling, Apple itself is not. While iPhone sales remain down, iPad and Apple Watch sales are up, while Services are booming. You can check out a more detailed breakdown of Apple’s last quarterly earnings here.

Source: Reuters