Apple Supplier Foxconn’s Sales Drop 9.5 Percent YoY Due to Low Global Smart Electronics Consumption

Taiwan’s Foxconn, the world’s largest contract electronics maker and major iPhone assembler for Apple, said on Monday that revenue in May fell 9.5 percent year-on-year due to weakness in smart consumer electronics during the traditional low season.

Foxconn, formally called Hon Hai Precision Industry, said revenue last month reached TWD 450.7 billion (roughly Rs. 1,21,300 crore), in line with its expectations, though it was up 5 percent compared with April.

For smart consumer electronics products, which include smartphones and are the company’s main business driver, revenue in May dropped as it entered the “traditional slow season” and coming off a high base, the company said in a statement, without elaborating.

Business in the second quarter is expected to decline due to a high base last year and “the seasonal off-peak period” amid a transition between old and new products, it said, offering an unchanged outlook from the previous month.

The first half of the year is traditionally slower for Taiwan tech manufacturers as major electronics vendors including Apple launch new products near the year-end holiday season.

Apple results for the quarter ended April 1 beat expectations, helped by better-than-expected iPhone sales and inroads in India and other newer markets.

However, Foxconn posted a 56 percent plunge in first-quarter net profit, lagging forecasts in its biggest quarterly fall in three years. It took a $565 million (roughly Rs. 4,670 crore) write-off linked to its 34 percent stake in Japanese electronics maker Sharp and said visibility for the full year was limited.

But Foxconn said last week artificial intelligence applications would strongly drive demand for its server business this year though it reiterated its 2023 overall performance would be a flat one for the company on global economic woes.

Foxconn shares have risen 7.6 percent so far this year, lagging the broader Taiwan market, which is up 18.2 percent. They closed down 0.5 percent on Monday, compared with a 0.1 percent gain for the broader market.

© Thomson Reuters 2023

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