Foxconn tipped to gain most from new red iPhones

The Taiwanese electronics maker, also known as Hon Hai, is set to profit from demand for Apple’s special edition iPhone 7 and iPhone 7 Plus

PUBLISHED : Thursday, 23 March, 2017, 3:37pm
UPDATED : Thursday, 23 March, 2017, 10:38pm

Apple supplier Hon Hai Precision Industry, the world’s largest contract electronics manufacturer, is poised to benefit the most from the worldwide release of new red iPhone models this weekend, according to analysts.

Technology giant Apple announced on Tuesday the availability in more than 40 countries of its special edition iPhone 7 and iPhone 7 Plus models with a vibrant red aluminium finish, the result of a collaboration with the organisation known as (RED) that licenses its brand to support programmes to eliminate HIV and AIDS in sub-Saharan Africa.

“The colour red is popular in Asia, particularly in India and China, and we could see incremental demand in this region for the red iPhone,” Citi Research analyst William Yang said on Thursday. “We believe Hon Hai would be the major beneficiary of the new red iPhone.”

Hon Hai , widely known under its trade name of Foxconn, is forecast by Citi to ship 150 million iPhones in its current fiscal year to March 31.

Founded by Taiwanese entrepreneur Terry Gou Tai-ming in 1974, Hon Hai has supplied the iPhone and iPad for Apple since the devices were introduced in 2007 and 2010, respectively.

Counterpoint Technology research director Neil Shah said the red iPhone models could deliver “a slight uptick” in demand in China and India, but “it will mostly cannibalise existing iPhone sales”.

That may well serve as a modest boost ahead of Apple’s anticipated “two-year super cycle”, which will see a large base of iPhone 5s, 6 and 6s Plus users upgrade to the new models, Shah said.

The colour red is popular in Asia, particularly in India and China, and we could see incremental demand in this region for the red iPhone
William Yang, analyst, Citi Research

Hon Hai’s iPhone shipments in the next four quarters are predicted by Citi to reach 157 million units, driven by the upcoming iPhone 8 release.

“In China, there might be some consumers who find the red colour appealing, but the impact may be limited if people are holding out for the iPhone 8 launch later this year,” said Bryan Ma, the vice-president for devices research at IDC.

Citi recently reported that Hon Hai will be Apple’s sole supplier for the iPhone 8 model with a 5-inch display. This model will be the only version built with an advanced organic light-emitting diode display.

Apple had also announced a weekend release for a new iPad with 9.7-inch display priced from US$329, down from the US$399 cost of the iPad Air 2 released in 2014.

In addition, Apple will launch an updated iPhone SE model with a four-inch display, that provides more storage capacity than the first model released last year.

The Foxconn group operates a vast network of factories in mainland China and around the world, providing components, modules and system assembly to many global brands in the personal computer, communications and consumer electronics sectors.