Hon Hai Precision Industry Co. posted a surprise fall in earnings amid technical hiccups that disrupted production of Apple Inc.’s 10th-anniversary iPhone.
Apple’s main device-assembler reported a decline in net income to $696 million in the three months ended in September.
That compared with the NT$37.2 billion projected.
Apple’s decision to adopt technically demanding facial-scanning sensors for the iPhone X initially stymied some suppliers and held back Hon Hai’s business in turn. The US company was said to have struggled to crank out enough of its priciest and most in-demand model for the crucial holiday period. And it continues to grapple with a dearth of suppliers capable of making organic light-emitting diode or OLED displays.
The growing market share of Chinese rivals from Huawei to Vivo also weighed on Hon Hai’s performance, given many assemble their own devices.
And while worldwide smartphone shipments grew 5 percent in the September quarter, that was driven by demand for cheaper handsets in emerging markets, according to researcher Counterpoint.
The linked trends of growing competition and vendors’ search for assembly alternatives jeopardise the company’s near-term outlook, Taiwan Ratings analysts Raymond Hsu and David Hsu wrote in a report. Against that backdrop, its acquisitiveness, seen most recently in an attempt to get in on the bidding for Toshiba Corp.’s memory chip division, was another concern.
“Growing signs that Hon Hai is attempting large-scale acquisitions may also hurt the balance sheet,” the two analysts wrote.