John Paczkowski

Recent Posts by John Paczkowski

Foxconn Flop Fuels iPhone Fears

Hon Hai Precision Industry, better known as Apple manufacturing partner Foxconn, posted its biggest revenue decline in over a decade this morning — one reportedly driven largely by lower iPhone sales.

Reporting first-quarter earnings, Hon Hai said revenue fell 19.2 percent from the year prior, to NT$809 billion. That’s well below the NT$895 billion analysts were expecting, and the largest drop in revenue the company has suffered since 2000.

The reason for the precipitous decline? Hon Hai won’t say. But it’s likely to have something to do with Apple. Between 60 percent and 70 percent of Hon Hai’s revenue is believed to stem from the company’s partnership with Apple. So when it posts ugly earnings like these, the quick and easy explanation for them is a slowing in demand for the iPhones and iPads it manufactures. As KGI Securities analyst Ming-chi Kuo told Reuters today, “This shows that Hon Hai’s revenue depends too much on Apple, and iPhone orders corrected more than expected.”

That may be true. But it’s important to remember that Hon Hai’s customer list stretches well beyond Apple, and boasts a number of big names, Hewlett-Packard, Dell, Nokia and Nintendo among them. Given the decline in the PC market, and continuing struggles at Dell, Nintendo and Nokia, it’s entirely possible that there are some other factors at work here, as well.

But that’s just speculation until Apple next reports earnings on April 23.

Hon Hai and Apple both declined comment.

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