Foxconn reports disappointing quarter just before iPhone 8 era begins

For the company's last three-month earnings report prior to the Apple iPhone 8 "era," contract manufacturer Foxconn disappointed global financial professionals and investors by reporting lower than expected profits for the calendar second quarter. Foxconn is known for assembling various devices, none more famous or popular than the Apple iPhone. There is speculation that the tenth anniversary iOS handset, a premium model, is already undergoing mass production inside certain Foxconn facilities.

For the quarter ended in June, Foxconn reported net of $589 million USD. That is a 25% shortfall from the $781.5 million that analysts were expecting. Part of the reason for the shortfall has to do with the current dynamics in the smartphone market. While the number of smartphones shipped during the quarter rose only 3%, most of the growth came from Chinese manufacturers like Huawei and Oppo that employ their own assembly plants.

Foxconn has been looking to cut costs by adding more robots to its assembly lines. While the company has its hand in the production of such varied tech items like PCs to video games, Apple alone makes up over half of the firm's top line revenue. As a result, there is some talk that iPhone 8, with a more complicated build than current iPhone models, could actually have a negative impact on Foxconn's next quarterly report. One Foxconn executive recently took to social-media to report that only 60% of the OLED panels received from the supply-chain have been good enough to meet the exacting standards set by Apple. The problem apparently has to do with a special cut needed at the top of the panel.

For the moment, it appears that Apple will be unveiling its 2017 lineup next month at the traditional time. KGI securities analyst Ming-Chi Kuo did send a report to clients at the beginning of the week telling them to expect only 2 million to 4 million iPhone 8 units to be available when the product launches, presumably next month.

source: Bloomberg