Foxconn has revealed in its latest earnings report that its smartphone revenue dropped by 15% in the second quarter of the year. That was a better-than-expected quarterly profit, as the company had previously warned that the impact of the COVID-19 coronavirus pandemic on smartphone demand would be “enormous.”
While Foxconn has a number of smartphone clients, the majority of its smartphone revenue comes from Apple.
Foxconn posted a net profit of $778.54 billion for the second quarter ended June, almost $5 billion more than a consensus estimate from analysts, and up around 34% from a year earlier. The results were a huge turnaround for the electronics manufacturer, following a nearly 90% drop in first-quarter profits.
Reuters reports that the Taiwanese company still expects its 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.
Foxconn said it continues to have concerns about the US trade war with China and was continuing 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.
Over 70% of the new iPhone lineup could be assembled by Foxconn, says Taipei-based KGI Securities. Analysts expect the launch to boost Foxconn’s revenue recovery in the coming months.