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iPhone Maker Hon Hai’s Profit Slides Ahead of Virus Outbreak

By Bloomberg / Mar 31, 2020 09:32 AM / Business & Tech

Photo: VCG

Photo: VCG

Hon Hai Precision Industry Co.’s profit fell 6% in 2019, after tepid smartphone demand and U.S.-Chinese tensions depressed sales ahead of the coronavirus outbreak.

Apple Inc.’s most important manufacturing partner posted net income of NT$115.3 billion ($3.8 billion) last year, versus an average estimate for NT$115.02 billion.

Hon Hai, which gets half its revenue from making iPhones and other devices for Apple in China, had grappled with rising U.S. tariffs on its goods even before Covid-19 smothered demand for electronics. Known also as Foxconn, the company has said it’s resolved labor shortages and is now back at normal seasonal capacity, but it remains to be seen how it fared during the March quarter, when the outbreak was declared a pandemic and government lockdowns dealt unprecedented shocks to the global supply chain.

Signs are that Apple’s Chinese-centric manufacturing -- of which Hon Hai is the linchpin -- is slowly getting back on track. The next iPhones with 5G wireless capabilities remain on schedule to launch in the fall, partly because mass production isn’t slated to begin until the summer, people familiar with matter have said. Yet the sort of assembly that Foxconn specializes in is but one part of Apple’s supply chain: the U.S. company and its partners spend months or even years sourcing components around the world and any disruptions to that complex network could delay future devices.

Related: IPhone Maker Projects China Plants to Return to Normal in Coming Weeks


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