Hon Hai Precision Industry Co., the biggest assembler of iPhones, reported better-than-projected earnings after snagging additional business from Chinese smartphone giant Huawei Technologies Co.
The company reported a 2.5% decline in net income to NT$17.1 billion, compared with the average analyst estimate of NT$16.3 billion.
Revenue for the April-June period reached NT$1.16 trillion, according to Bloomberg calculations from previous monthly sales data provided by the company, a record for the second quarter.
Hon Hai, the biggest piece of billionaire Terry Gou’s Foxconn Technology Group, has struggled to find new sources of growth after smartphone demand began to tail off in 2018. But in the June quarter, its Hong Kong-listed subsidiary FIH Mobile Ltd. cut costs and likely won orders from rival Flex Ltd., which shunned business from Huawei in response to US sanctions.
While investors expect US President Donald Trump’s sanctions to eventually wallop Huawei’s business, the impact of those curbs should be fully felt only in the second half of the year.
Flex’s orders from Huawei had gone to FIH, and that would benefit the company’s sales momentum in the second half, analyst Arthur Liao at Fubon Securities wrote in a July 23 note.
From Inventec to Apple-assembler Hon Hai Industry Co., Taiwanese companies that make most of world’s electronics are reconsidering their reliance on the world’s No. 2 economy as Washington-Beijing tensions simmer.
Rising tariffs on Chinese-made products threaten to wipe out their margins and up-end a well-oiled, decades-old supply chain. Microsoft Corp., Amazon.com Inc., Sony Corp. and Nintendo Co. are said to be among those now weighing their options away from the line of fire, such as Southeast Asia and India.
Alphabet Inc.’s Google has already shifted much of its production of US-bound motherboards to Taiwan, Bloomberg News has reported.