Hon Hai – a Taiwanese firm also known as Foxconn, said that its fourth quarter profits rose to $1.8 billion on the back of the success of Apple’s iPhone.
Hon Hai makes most of Apple’s iPhones and has been criticised in the past for harsh employment practices.
But Bloomberg estimates, based on yearly results filed on Taiex – the Taiwanese bourse today – is far higher than financial analysts originally estimated.
Bloomberg claims the profits have been generated by iPhone 6 phones, which saw a surge in sales since their launch in Autumn last year. It believes half of Foxconn’s revenues are generated by Apple business, although there’s no hard and fast evidence for that.
But while Hon Hai may have turned in a rather healthy profit, its operating margin was only about 4.2 percent. Generally speaking, Taiwanese manufacturers of electronic devices have very slim margins indeed – not anything like the kind of margins Apple itself generates.
Although Foxconn’s Terry Gou had forecast growth of 10 percent in its full financial year, the actual growth was only 6.6 percent, Bloomberg reports.
Foxconn will slash jobs because of falling demand for Apple gear.
That’s according to Reuters, which has spoken to a company representative who confirmed the cuts will come.
The representative who works to the chairman of the board, said labour costs had doubled since 2010.
Foxconn currently hires 1.3 million people and came under fire in 2010 after a number of its workers killed themselves.
The Reuters report said
revenue growth for Foxconn fell to 1.3 percent in 2013.
Analysts are predicting that the massive growth in sales of smartphones and tablets is bound to decline as saturation levels increase.
Both Apple and Samsung now face intense competition from own brand Chinese smartphone vendors offering units at rock bottom prices and with rock bottom margins.
Hon Hai Precision Industry has tied up with flat panel maker Innolux and is investing $2.8 billion in a panel producing plant in Taiwan.
Hon Hai is desperately trying to find new revenue streams which do not depend on the fruity themed cargo cult, Apple. Earlier this year it bought stakes in a Taiwanese mobile network provider and a South Korean IT services provider.
Under the plan, the pair will buy equipment for the facility located in the southern city of Kaohsiung and which is expected to start production in the second half of 2016.
The plant, which will make low-temperature polysilicon panels, predominantly for use in smartphones, was built in 2008, but was mothballed due to financial constraints after the 2008 global financial crisis.
The plans are still awaiting final approval from the boards of both companies, but it seems likely that Hon Hai will stump up for the majority of the cash. The Innolux representative said the investment may take the form of a new joint-venture company.
Hon Hai already holds a nine percent stake in Innolux though its various subsidiaries. It is all a little mysterious dot com.
It seems that the fruity cargo cult Apple has started the hype for the launch of its new iPhone.
While other outfits have to pay for their advertising, Apple manages to attract huge attention for its product launches thanks to its fans in key newspapers.
This morning it was “leaked” that Hon Hai has begun mass production of Apple next-generation iPhone.
You can tell if a story has been written with the idea of marketing Apple products on the sly, because they are full of marketing phrases such as “game changing” and “wildly popular.”
While the worst offender is traditionally the New York Times, Reuters has also sacrificed its credibility with unethical marketing plugs.
This morning, someoneat Reuters wrote this:
“Mass production of a 4.7-inch successor to the wildly popular iPhone 5 series of smartphones will begin during the third week of July.” Firstly, the iPhone 5 was not “wildly popular” in comparison to other smartphones, secondly the 4.7 inch screen size is pretty backward.
So far the so called “next-generation” iPhone appears to be thinner than the earlier models but has no especially interesting software, in fact it will be playing catch-up until a 5.5 inch model is released later.
It does seem clear that manufacturing of the latest iPhone has begun. A report from a China state-run news service said Hon Hai is planning to hire 100,000 workers. Of course Apple’s Tame Apple press suggest this will be to “meet future demand for the gadget.”
Pegatron also began recruitment of over 10,000 workers for its mainland facilities to manufacture the phone, according to the Economic Daily News report.
This hype is going to get worse until the first queues start to form outside the Apple cathedrals of delight. But with mass production started, the chance of a leak is much higher and we will soon know what it looks like.