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Foxconn sees 41% profit surge due to strong iPhone sales

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Foxconn, a major manufacturing partner of Apple who assembles iPhones for the company is enjoying some nice attention right now.  Apple didn’t necessarily impress investors with Q3 report, however there is one aspect that everyone was impressed with.  iPhone sale number blew everyone out of the water.  Out of everyone, who sees large portion of the benefit?  Foxconn does.

Wall Street had predicted that would sell between 25 to 27 million handsets during the period, but it sold 30 million headsets.  Apple posted $6.9 billion in profits during Q3, impressive, but Foxconn also enjoyed a very nice boost.  The Taiwanese-based company saw a 41% boost in profits.

Here is what The Wall Street Journal reported:

“TAIPEI—Hon Hai Precision Industry Co., 2317.TW +2.06% assembler of Apple Inc.’s AAPL +4.75% iPhones and iPads, posted a 41% rise in second-quarter net profit, helped by strong iPhone sales.

But the profit jump is unlikely to soothe concerns that the company, which earns more than 40% of its revenue from Apple, faces challenging times ahead as Apple’s growth momentum slows. Hon Hai’s shares, traded in Taiwan, have fallen about 12% since the beginning of 2013, mirroring Apple’s losses earlier this year on concerns over customer fatigue with iPhones and iPads. The benchmark Taiex stock-market index gained 3.6% during the same period.”

Analysts had estimated Foxconn to post NT$16.32 billion in profits, but the company blew them out of the water with net profit of 16.98 billion New Taiwan dollars.  Last year, the net profit was NT$12.06 billion, but as you can see, the company has made quite the improvement.

Now that Apple is getting ready to make the iPhone 5S/5C announcement, Foxconn is speeding up production to mass produce.  One problem stopping mass production is the fingerprint sensor.  The assembling of the fingerprint sensor is reportedly slowing down mass volume production, which will limit the amount of iPhones Apple can sell during launch.

Will the company see another profits rise, will the profits stay the same, or will they get worse?

 

 

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Hamza Khalid

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