IPhone helps boost earnings for Foxconn's Hon Hai

Foxconn assembles the iPhone and iPad in factories in Brazil and China

Big demand for Apple's iPhone likely helped Foxconn Technology Group's main manufacturing arm increase net profits by 19.5 percent in this year's first quarter.

Foxconn's Hon Hai Precision Industry reported a net profit of NT$19.542 billion (US$647 million) in the period, up from NT$16.352 billion a year ago. This was slightly under the NT$19.6 billion estimate analysts polled by Bloomberg had projected for the company.

Hon Hai generated NT$883.5 billion in revenue, representing a year-over-year increase of 9.2 percent. But it still falls behind the NT$1 trillion, the company made two years earlier.

The Taiwan-based Foxconn is best known as a major supplier for Apple, and assembles the iPhone and iPad in factories located in both Brazil and China. Analysts estimate that Apple's business makes up 40 to 50 percent of Foxconn's revenue.

For this year's first quarter, Apple also reported strong earnings. While iPad shipments fell, iPhone shipments were up, reaching 43.7 million units for a year-over-year increase of 17 percent.

Part of the boost in iPhone shipments has come from China. Starting in January, Apple began selling its flagship handset through China Mobile, the country's largest mobile carrier with over 700 million customers. This helped Apple to become China's fourth largest smartphone vendor in the period, according to research firm Canalys, with the bulk of the shipments for the iPhone 5S and the older iPhone 4S.

Foxconn also builds products for many other clients, such as video game console vendors such as Microsoft, Nintendo and Sony. In addition, the company assembles phones for Xiaomi, a local Chinese handset maker that recently became the nation's third largest smartphone vendor.

Still, the company faces challenges and is trying to elevate its manufacturing abilities. Foxconn also counts PC vendors such as Hewlett-Packard and Dell as clients, but increasingly the market for notebooks is shrinking. Rival manufacturing firms such as Taiwan-based Pegatron have also become suppliers of Apple, and could end up taking orders away from Foxconn.

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Tags smartphonesbusiness issuesAppleiPhonefinancial resultsconsumer electronicsFoxconn Technology Group

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Michael Kan

IDG News Service
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