Published in Mobiles

Foxconn misses estimates

by on13 November 2018

Still rose by 18 per cent

Taiwan’s Foxconn, the world’s top contract electronics maker and a key Apple supplier, posted an 18.3 percent rise in third quarter net profit. This figure was well below what analysts had been expected.

Net profit for the three months ended September was $805.52 million.

This was below a mean estimate of T$28.26 billion  $3.23 million expected by nine analysts. Shares in Foxconn and other Asian suppliers and assemblers for Apple fell on Tuesday after several component makers warned of weaker than expected results, leading some market watchers to call the peak for iPhones in several key markets.

Net profit in the third quarter was down 39.2 percent from a year ago and was propped up by Foxconn-controlled Sharp which booked a net profit of  $177 million in the July-September quarter. T

"Foxconn had to recognise some initial [iPhone X] production costs in the third quarter, and labour costs are higher this year partly due to a shortage of labour. As peak season has been pushed back, Foxconn's revenue was not quite enough to cover the rising costs in the past quarter" to deliver stellar profits, said Vincent Chen, an analyst at Taipei-based Yuanta Investment Consulting. Chen however believes that there is a robust demand for iPhone X - something that some analysts do not agree with.

Apple accounts for more than half of  Foxconn's total revenue. Other than iPhone X, Foxconn is also assembling the iPhone 8 Plus this year.

Issues with facial identification parts created a bottleneck in the mass production of iPhone X before the handset went on sale on Nov.3. Those issues appear to have been mostly resolved now as waiting time for customers is about three to four weeks.

It seems that Foxconn will continue to rely on iPhone orders for growth this year which means that things are not looking that great.

Last modified on 13 November 2018
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