Apple’s main supplier Foxconn may look to reduce dependence on iPhones

    Reliance on Apple isn’t over yet, though. More than 51% of sales still came from Apple last year, but down from 54.2% in 2016.
    By TIM CULPAN
    | Updated on Jun 22 2018, 10:46 AM IST
    Since the iPhone is highly cyclical, and the latest release showed weakness, it’s important to be cautious about extrapolating too much from just one quarter.
    Since the iPhone is highly cyclical, and the latest release showed weakness, it’s important to be cautious about extrapolating too much from just one quarter. (AP)
    Since the iPhone is highly cyclical, and the latest release showed weakness, it’s important to be cautious about extrapolating too much from just one quarter.
    Since the iPhone is highly cyclical, and the latest release showed weakness, it’s important to be cautious about extrapolating too much from just one quarter. (AP)

    When Terry Gou meets shareholders at Hon Hai Precision Industry Co's annual general meeting today he will likely talk about US expansion, booming China, a looming trade war, AI, automation, and cloud computing.

    Also read: Looking for a smartphone? To check mobile finder click here.

    He may even talk about Foxconn Technology Group's addiction to Apple's iPhone. After all, admitting you have a problem is the first step to solving it.

    Over at Foxconn Industrial Internet Co, a smaller unit that recently went public in Shanghai, the dependence on iPhones is evident. Its three largest single orders last year were from Apple, totaling $7.5 billion, for smartphone frames and outer casings.

    Data from last year, and the first quarter of this year, show encouraging signs Gou may be kicking the habit.

    While revenue at iPhone assembler Hon Hai climbed 8% in 2017, orders from Apple grew just 1.8% , according to my calculations. In other words, other clients were contributing more to Foxconn's top line. Hon Hai is the largest member of the Foxconn group, and is a controlling shareholder of its affiliates including FII.

    Reliance on Apple isn't over yet, though.

    More than 51% of sales still came from Apple last year, down from 54.2% in 2016. Yet first-quarter 2018 figures point to an even bigger decline: Only 45% of revenue was due to its largest customer, the lowest for that period since at least 2013.

    Since the iPhone is highly cyclical, and the latest release showed weakness, it's important to be cautious about extrapolating too much from just one quarter. That said, data from past years show that when first-quarter Apple contribution dipped, so too did the figure for the entire year.

    If this is indeed a trend, we might see revenue contribution from Apple fall below 50% for the first time in six years. That would be just what the doctor ordered.

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    First Published Date: 22 Jun, 10:46 AM IST
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