Foxconn's Hon Hai reports Q1 revenue drop, likely on weak iPhone 5 demand

Hon Hai's first quarter profit was up 8.4 percent year-over-year

Foxconn's Hon Hai Precision Industry posted a 19.2 percent year-over-year decline in revenue for the first quarter, with sales likely affected by weak demand for Apple's iPhone 5, according to an analyst.

The Taiwanese contract manufacturer said on Wednesday its revenue for the quarter was NT$809 billion (US$27 billion), although net profit was up 8.4 percent year-over-year, reaching NT$16.4 billion.

Hon Hai Precision Industry is the main manufacturing arm of Foxconn Technology Group, which is best known as a supplier to U.S. tech giant Apple. The partnership between the two companies has helped fuel Foxconn's rapid growth in recent years, especially in China where it has over 1.2 million employees.

But in this year's first quarter, sales of Apple's iPhone 5 have been in decline, which was the main reason for the drop in Hon Hai's revenue, said Arthur Liao, an analyst with Fubon Securities Investment Services Co. In addition, consumers are buying up Apple's lower-cost iPad mini over the more profitable iPad, he said.

"I also believe (Hon Hai's) second quarter will be worse than the first quarter," Liao said. The popularity of Apple's latest iPhone model is waning, and consumer demand will shift to competing smartphones from Samsung, HTC and Nokia in the second quarter, he added.

Analysts estimate that Apple's business accounts for 40 to 50 percent of Foxconn's revenue. But the Taiwanese company is losing some of Apple's product orders to rival supplier Pegatron, which is offering aggressive pricing on manufacturing.

Apple is preparing to launch a lower-priced iPhone model in third quarter, according to Liao and his sources. But production of the device will solely go to Pegatron and not Hon Hai, he added. The budget iPhone will be priced between $300 and $350 without carrier subsidies, and feature a plastic casing.

"It will have cheaper components, but it won't be a cheap phone," he added.

Apple could not be immediately reached for comment. But rumors of a budget iPhone have long circulated through the tech press. Earlier this year, however, Apple marketing chief Phil Schiller reportedly dismissed the idea that the company was working on a cheaper iPhone to grab market share.

Join the Good Gear Guide newsletter!

Error: Please check your email address.

Tags business issuesAppleFoxconn Technology Groupfinancial results

Our Back to Business guide highlights the best products for you to boost your productivity at home, on the road, at the office, or in the classroom.

Keep up with the latest tech news, reviews and previews by subscribing to the Good Gear Guide newsletter.

Michael Kan

IDG News Service
Show Comments

Essentials

Lexar® JumpDrive® S57 USB 3.0 flash drive

Learn more >

Microsoft L5V-00027 Sculpt Ergonomic Keyboard Desktop

Learn more >

Mobile

Lexar® JumpDrive® S45 USB 3.0 flash drive 

Learn more >

Exec

Audio-Technica ATH-ANC70 Noise Cancelling Headphones

Learn more >

Lexar® JumpDrive® C20c USB Type-C flash drive 

Learn more >

Lexar® Professional 1800x microSDHC™/microSDXC™ UHS-II cards 

Learn more >

HD Pan/Tilt Wi-Fi Camera with Night Vision NC450

Learn more >

Budget

Back To Business Guide

Click for more ›

Most Popular Reviews

Latest News Articles

Resources

PCW Evaluation Team

Azadeh Williams

HP OfficeJet Pro 8730

A smarter way to print for busy small business owners, combining speedy printing with scanning and copying, making it easier to produce high quality documents and images at a touch of a button.

Andrew Grant

HP OfficeJet Pro 8730

I've had a multifunction printer in the office going on 10 years now. It was a neat bit of kit back in the day -- print, copy, scan, fax -- when printing over WiFi felt a bit like magic. It’s seen better days though and an upgrade’s well overdue. This HP OfficeJet Pro 8730 looks like it ticks all the same boxes: print, copy, scan, and fax. (Really? Does anyone fax anything any more? I guess it's good to know the facility’s there, just in case.) Printing over WiFi is more-or- less standard these days.

Ed Dawson

HP OfficeJet Pro 8730

As a freelance writer who is always on the go, I like my technology to be both efficient and effective so I can do my job well. The HP OfficeJet Pro 8730 Inkjet Printer ticks all the boxes in terms of form factor, performance and user interface.

Michael Hargreaves

Windows 10 for Business / Dell XPS 13

I’d happily recommend this touchscreen laptop and Windows 10 as a great way to get serious work done at a desk or on the road.

Aysha Strobbe

Windows 10 / HP Spectre x360

Ultimately, I think the Windows 10 environment is excellent for me as it caters for so many different uses. The inclusion of the Xbox app is also great for when you need some downtime too!

Mark Escubio

Windows 10 / Lenovo Yoga 910

For me, the Xbox Play Anywhere is a great new feature as it allows you to play your current Xbox games with higher resolutions and better graphics without forking out extra cash for another copy. Although available titles are still scarce, but I’m sure it will grow in time.

Featured Content

Latest Jobs

Don’t have an account? Sign up here

Don't have an account? Sign up now

Forgot password?