Foxconn Well Below Forecast on Rising Operating Costs, Shares Fall
The major problem would be that analysts are concerned about a loss of momentum in the smartphone market on a global level, primarily because the last year was the first year that smartphone sales weren’t as high as the previous. The reason profits are down is internal investment soared 18.8% this last quarter. “Investment in factory automation and component price hikes capped gross margin,” said analyst Arthur Liao of Fubon Research. This, as well as an investment in the United States, was likely to hit them in their net profits.
While Foxconn has not been mired in controversy as of late with depressed workers, they are still a bit on the exposed side when it comes to just how much their business relies on the smartphone market, causing the situation that when that market goes anemic, so do their profits. The major problem ended up being the massive amount of unsold inventory they are carrying for the iPhone X, analysts noted. Additionally, with Apple (
“We expect Hon Hai to be the main assembler of OLED version new iPhones and we believe the OLED iPhone model will see better demand in 2H18F.”
So while down this quarter, this is by no means an out for the world’s largest electronics company. Foxconn is getting ready to ramp up is what this indicates, and hopefully, we can all expect to see a round of amazing components out of Foxconn for years to come.