Hon Hai Precision Industry Co (鴻海精密), a major assembler of Apple Inc’s iPhones, on Tuesday reported that net income last quarter fell 2.5 percent annually to NT$17.05 billion (US$543 million), with earnings per share (EPS) of NT$1.23.
While revenue rose 7.44 percent annually to NT$1.16 trillion, gross margin and operating margin declined to 5.31 percent and 1.34 percent respectively from 5.63 percent and 1.47 percent a year earlier, which Fubon Securities Co (富邦證券) analyst Arthur Liao (廖顯毅) blamed on lackluster sales of Apple’s high-margin flagship smartphones.
“It’s not going to get better in the upcoming months … even with Apple launching new [IPhone] models,” Liao said in a note.
Liao predicted a 2 percent annual decline in Hon Hai’s iPhone shipments of 26.8 million units this quarter.
Liao also said FIH Mobile Ltd (富智康), a Hong Kong-listed subsidiary in which Hon Hai holds a 62.8 percent stake, might continue to incur losses through the first half of next year.
The unit on Monday reported a net loss of US$84.08 million for the first half of this year.
Hon Hai’s board of directors on Tuesday approved a US$25.1 million plan to acquire electronics manufacturer Competition Team Technology (Vietnam) Co through its subsidiary Foxconn Singapore Pte Ltd (富士康新加坡), a move analysts see as a plan by the firm to boost investment in Vietnam.
Separately, leading original design manufacturer Compal Electronics Inc (仁寶) on Tuesday reported that net income in the second quarter fell 14 percent annually to NT$1.79 billion, or EPS of NT$0.41, while revenue increased 6 percent to NT$252.4 billion.
While the US-China trade dispute still poses as a major threat, “we are still aiming to maintain the momentum of double-digit percentage growth in laptop shipments this year,” Compal president Martin Wong (翁宗斌) told an earnings conference in Taipei.
The company aims to increase its capital expenditure as it looks to relocate the production of PCs and smart mobile devices, among others, to Vietnam by early next year, Wong said.
Compal is also considering relocating part of its production to Indonesia, while its Taoyuan plant would soon start shipping laptops to the US on clients’ demands, he said.