Foxconn's Profit Down 39% Amid iPhone Production Woes -- Update

By Yoko Kubota Features Dow Jones Newswires

Foxconn Technology Group posted a 39% drop in quarterly net profit amid production challenges dogging its largest customer -- Apple Inc. -- over the new iPhone X.

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The iPhone X, which Foxconn assembles in China, went on sale this month after it was plagued by a series of production problems among Apple's suppliers. The troubles were centered around new technologies packed into Apple's latest smartphone.

Taiwan-based Foxconn, known formally as Hon Hai Precision Industry Co., posted 21 billion New Taiwan dollars (about $695.5 million) in net profit in the three months to September, its statement showed Tuesday. That was lower than the NT$35.6 billion average estimate of analysts polled by the S&P Global Market Intelligence.

Quarterly revenue was NT$1.1 trillion, nearly flat from a year before.

Hon Hai doesn't give guidance or hold earnings conferences. Its shares closed down 0.9% on Tuesday.

Suppliers and contract electronics makers that rely heavily on Apple are often hit when production bottlenecks emerge in Apple products.

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Pegatron Corp., which assembles the iPhone 8, said last week that its quarterly net profit fell 32.4%, which analysts attributed to components shortage and labor issues.

Apple released a trio of new phones this year. The iPhone X, with a price tag of around $1,000 went on sale on Nov. 3, six weeks after the iPhone 8 and 8 Plus were released.

The production problems of the iPhone X included shortage of components used in the facial-recognition system and manufacturing difficulties over the organic light-emitting diode screens, The Wall Street Journal has reported.

Production of the iPhone X is likely to rise in coming months. Apple's production volume rose around 3% in the third quarter to around 44 million iPhones from the previous quarter, research firm TrendForce said in a note. In the fourth quarter, that is expected to jump to 81 million phones, with the iPhone X expected to account for a third of that, TrendForce said.

Lisa Lin in Shanghai contributed to this article.

Write to Yoko Kubota at yoko.kubota@wsj.com

(END) Dow Jones Newswires

November 14, 2017 08:51 ET (13:51 GMT)