By Yoko Kubota
This article is being republished as part of our daily reproduction of WSJ.com articles that also appeared in the U.S. print edition of The Wall Street Journal (August 14, 2019).
BEIJING — Foxconn Technology Group’s profit fell 2.5% in the second quarter as its biggest customer, Apple Inc., continues to struggle with weak iPhone sales.
Taiwan-based Foxconn, the world’s largest contract electronics maker, on Tuesday posted profit of 17.05 billion New Taiwan dollars (US$541.5 million). Revenue for the period rose 7.4% from a year earlier to NT$1.16 trillion.
Analysts polled by FactSet were expecting profit of NT$15.97 billion on average.
Foxconn, known formally as Hon Hai Precision Industry Co., assembles Apple’s iPhones, among other products, mostly in China. It relies on Apple for about half of its revenue, according to analyst estimates.
Apple has been grappling with slowing iPhone sales as customers hold on to smartphones longer and Chinese rivals gain ground with lower-price, feature-rich handsets. In its latest quarter, iPhone sales dropped 12%, and for the first time since 2013 they didn’t account for the majority of Apple’s revenue, according to eMarketer.
Apple offset the iPhone sales decline with revenue growth in every other area of its business, including iPads and Macs, which Foxconn also assembles.
The trade war between Washington and Beijing has prompted Apple and Foxconn to consider shifting some production away from China. Cellphones are among the Chinese goods that the Trump administration plans to hit with tariffs, though the start date has been delayed to Dec. 15 from Sept. 1.
Foxconn has undergone a leadership transition in recent months. Its founder, Terry Gou, stepped down as chairman to enter Taiwan’s presidential race. He subsequently lost his bid for nomination by the main opposition Nationalist Party, or Kuomintang. In July, Young Liu, who had overseen Foxconn’s semiconductor business, took over as chairman. The company also formed a new operations committee of nine executives to make key management decisions.
Foxconn doesn’t hold earnings calls or briefings.
Shan Li contributed to this article.
Write to Yoko Kubota at email@example.com
(END) Dow Jones Newswires
August 14, 2019 02:47 ET (06:47 GMT)
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