Apple iPhone supplier saw profits fall 24% ahead of virus disruption
Taiwanese electronics manufacturer Foxconn has reported a 23.7% fall in profit for the last three months of 2019, as it braces for the impact from the coronavirus pandemic that has hit demand from key customers such as Apple.
Foxconn, which assembles iPhones at factories in China, reported net profit of $1.6bn (€1.4bn). The fall came after tepid smartphone demand and US-Chinese tensions depressed sales ahead of the outbreak.
Foxconn is among manufacturers worldwide grappling with the fallout from coronavirus restrictions that have disrupted supply chains and hurt demand.
Foxconn is Apple’s most important manufacturing partner and gets half its revenue from making iPhones and other devices for Apple in China. It grappled with rising US tariffs on its goods even before Covid-19 smothered demand for electronics. The company has said it has resolved labour shortages and is now back at normal seasonal capacity.
But it remains to be seen how it fared during the first quarter of this year, when the outbreak was declared a pandemic and government lockdowns dealt unprecedented shocks to the global supply chain.
Foxconn’s sales pressure from the global coronavirus spread, US-China trade dispute, smartphone-market weakness and a broader slowdown in tech spending won’t abate quickly, even as its Chinese manufacturing gets back to full seasonal capacity. The world’s largest electronics manufacturing-services provider is investing heavily in automation to reduce costs and improve asset efficiency.
Signs are that Apple’s Chinese-centric manufacturing - of which Foxconn is the linchpin - is slowly getting back on track. The next iPhones with 5G wireless capabilities remain on schedule to launch in the autumn. Yet, the sort of assembly that Foxconn specialises in is but one part of Apple’s supply chain.
— Reuters/Bloomberg
