Foxconn smartphone revenue dropped by 15% in the second quarter of the year, according to the company’s latest earnings report. Although Foxconn has a number of phone clients, the majority of its smartphone revenue comes from Apple.
The company had previously warned that the impact of the coronavirus crisis on smartphone demand would be ‘enormous‘ …
The 15% drop was in line with the company’s forecast, made back in May.
Foxconn says that the coronavirus impact on smartphone demand is set to be ‘enormous,’ and recovery will take ‘a very long time.’
Liu said that the outlook for the second half of the year was unclear. He expects growth from the computing division, as lockdowns create demand for devices geared to both working from home and home entertainment, but says that smartphone demand is going to take a huge hit.
The division is forecast to post a 15% yearly decline in sales.
Reuters reports that the company still expects Foxconn smartphone revenue to be down year-on-year in Q3, but says that the position will be somewhat better than Q2.
In the third quarter, Foxconn expects overall revenue to post a yearly double-digit decline and revenue from the consumer electronics division to drop about 10% from a year earlier.
Although Apple has said that this year’s iPhones will go on sale ‘a few weeks later‘ than usual, pushing retail sales into calendar Q4, Foxconn would still be assembling the new models in Q3.
Foxconn said it remained concerned about the US trade war with China, and was pushing ahead with plans to expand manufacturing elsewhere.
The company also risks getting caught in the China-U.S. trade war, and Liu said Foxconn was working to build two supply chains, one for China and one for the United States, pointing to the company’s investments in Wisconsin, Mexico, Brazil and Southeast Asia as examples of it diversifying around the world.
“The world factory no longer exists,” he said, adding that currently about 30% of the company’s products were made outside China and the ratio could increase “in the future”, although he declined to elaborate.
Tensions between China and the US remain Apple’s biggest threat too, with one noted analyst warning that a WeChat ban could see the iPhone maker’s global sales fall by as much as 30%.
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