Foxconn Posts Unexpectedly Low Profit as Smartphone Sales Slow

Electronics maker Foxconn posted a less-than-expected second quarter profit on Monday, which analysts suggest is related to a global downturn in smartphone sales.

Electronics maker Foxconn posted a less-than-expected second quarter profit on Monday, which analysts suggest is related to a global downturn in smartphone sales.

According to Reuters, Foxconn posted a net profit of $567.25 million for the second quarter, 20 percent below predictions. In response to the decline, Foxconn stocks fell about 3 percent.

Reports from Foxconn attributed the dip in part to a backlog of unsold inventory of the iPhoneX. The smartphone market is heavily saturated, which slows down demand, said Foxconn unit FIH Mobile Ltd. Analysts also report high component prices leading to an increase in operating costs of 18.8 percent sequentially. But the dip in business might be temporary, since Foxconn is expected to be the primary assembler of OLED screens used in upcoming iPhone models.

Yuanta Research analyst Vincent Chen said that Foxconn also has a strong, diversified portfolio, with business ventures in autonomous cars, cancer research, and the electronics company Sharp Corp.

Foxconn, known for making Apple’s iPhones in factories in Taiwan and elsewhere, has become a touchstone for conversation about United States politics and trade. President Donald Trump praised the opening of a Foxconn factory complex in Wisconsin, which is expected to employ 13,000 people. For some, the new plant is a sign of the American economy benefitting from “made in America” manufacturing. Opponents of the financial side of the deal point out the hefty taxpayer subsidies Foxconn might receive if it hits business benchmarks.

The company also tends to draw the spotlight from labor advocacy groups and the press due to reports of unlawful labor conditions.

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