Reuters has reported that Apple’s long time partner and component supplier Foxconn was not able to post impressive sales in the first quarter of 2013, as the sales of the Taiwan-based company plunged down by 19 percent in contrast to the same period in 2012. According to Reuters, the reason behind this decline is the low demand for Apple’s iPhone. Earlier in 2012, the sales of Foxconn touched $1 trillion mark in the first quarter, whereas this year the Taiwanese company just managed to make $808.97 billion sales in total.
Reuters also suggested in its story that Ming-chi Kuo, an analyst from KGI Securities has said that Foxconn, which is also known as Hon Hai Precision, was not expecting a drop in its sales during the first quarter of 2013. Therefore, the result was not less than a revelation for the Taiwanese company. Kuo also said that this drop in sales depicts how much Foxconn’s revenue relies on Apple and its flagship smartphone.
Here are the exact words of KGI Securities’t Ming-chi Kuo: “A quarterly decline was expected, but not a yearly decline. This shows that Hon Hai’s revenue depends too much on Apple, and iPhone orders corrected more than expected.”
According to an estimate, at this point in time Hon Hai is earning about 60 to 70 percent of its income from the assembling of Apple’s iPad and iPhone, besides some other work that the company takes care of for the California-based tech giant.
“Kuo expected the Taiwanese contract manufacturer to post flat sales in the second quarter compared with the first, adding that its net profit is also likely to come under pressure in the first half of this year.
Apple missed Wall Street’s revenue forecast for the December quarter. Disappointing holiday sales reinforced fears it is losing its dominance in smartphones.”
The total sales of Foxconn in the last quarter of 2012 was T$988.34 billion. So a 19 percent drop in sales is a signal for the company to shift its focus on finding new clients. To the extent the low demand of iPhone is concerned it probably happened because in the last month or two several major smartphone manufacturers, including Samsung have launched their flagship devices, which offer better specs than the current iPhone.
The other reason could be that people might be anticipating the launch of the next iPhone in the coming months therefore the demand for the iPhone 5 went down.
Source: iPhoneinCanada, 9to5Mac
Photo: Modmyi
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