Apple supplier Foxconn’s profit gutted by smartphone slump

Foxconn, the world’s largest electronics contract manufacturer, posted an 89 per cent decline in profit in the first quarter

The company warned of continued uncertainty in smartphone demand during the second half of this year

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Taiwan-based Foxconn Technology Group, formally known as Hon Hai Precision Industry, said it incurred costs related to the coronavirus pandemic worth about US$334 million. Photo EPA-EFE

Published: 8:55pm, 15 May 2020Updated: 8:55pm, 15 May 2020

Foxconn Technology Group forecast another revenue decline after profit plunged by the most on record in the March quarter, when the novel coronavirus froze much of its China production and walloped global smartphone demand.

Apple’s most important manufacturing partner recorded an 89 per cent decline in net income to NT$2.1 billion (US$70 million) in the first three months of the year.

Chairman Liu Young-way told analysts on Friday that the company, formally known as Hon Hai Precision Industry, anticipates a single-digit percentage decline in revenue in the June quarter from a year earlier. That would be its third consecutive quarterly sales drop.

The earnings decline drove home to extent to which Covid-19 and the resultant global lockdown has chilled electronics demand and driven up costs for upstream producers like Foxconn, which had to adapt to supply chain disruption.

Half of Foxconn Technology Group’s sales are generated from manufacturing iPhones and other devices for Apple. Photo: Felix Wong

Global shipments of smartphones fell at their fastest rate on record in the first quarter, hitting the Taiwan-based electronics contract manufacturer’s sales even though its main production facilities managed to return to full seasonal staffing levels around mid-March.

On Friday, Foxconn said it incurred costs related to the pandemic of NT$10 billion, though some of that will be compensated by the Chinese government.

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