iPhone sales drive Apple’s biggest supplier to big profits

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iPhone sales drive Apple’s biggest supplier to big profits
Apple accounts for an estimated half of all Foxconn revenue.
Photo: CBS

Apple contract supplier Foxconn has announced better-than-expected quarterly profits, rising 23%. Apple accounts for an estimated half of all Foxconn revenue, thanks largely to the iPhone.

Foxconn’s earnings offer another data point about rebounding iPhone sales. At worst, they should pacify any investors concerned about weak global demand for Apple’s smartphones.

Apple’s no. 1 supplier profits

Apple supplier Foxconn reported a net profit of T$30.7 billion ($1 billion) for the July through September quarter. That was more than the T$27.75 billion average forecast from predictions made by 12 analysts.

Foxconn’s new chairman Liu Young-way told an investor conference that he expects that there will be slight yearly growth in 2020. That’s due to a “stabilizing global economic situation.” He also said that Foxconn plans to boost its gross profits from 6-7% today to more than 10%.

“We predict an improving outlook for [Foxconn] in 2020 thanks to better iPhone shipments,” KGI Securities predicted ahead of the results. KGI expects that that iPhone shipments will grow by up to 10% next year. Apple’s launch of the first 5G iPhones is likely to help boost consumer interest.

Foxconn’s Wisconsin factory

In the same report, Liu denied that Foxconn was scaling back plans for its factory in Wisconsin. Foxconn’s Wisconsin factory broke ground in 2018. At the groundbreaking, President Trump said that, “As Foxconn has discovered, there is no better place to build, hire, and grow than right here in the United States.”

Foxconn received $4 billion worth of tax breaks for the factory. However, behind-the-scenes dealings suggest that the company may have tried to renegotiate terms since then. Liu said this is not the case. He said that, in addition to building flat screen panels, Foxconn will also pursue high performance computing and data centers in Wisconsin.

Source: Reuters