Apple’s main supplier Foxconn may look to reduce dependence on iPhones

Reliance on Apple isn’t over yet, though. More than 51% of sales still came from Apple last year, but down from 54.2% in 2016.

tech Updated: Jun 22, 2018 10:46 IST
Tim Culpan
Tim Culpan
Bloomberg
Foxconn Website,Foxconn Products,Foxconn India
Since the iPhone is highly cyclical, and the latest release showed weakness, it’s important to be cautious about extrapolating too much from just one quarter.(AP)

When Terry Gou meets shareholders at Hon Hai Precision Industry Co’s annual general meeting today he will likely talk about US expansion, booming China, a looming trade war, AI, automation, and cloud computing.

He may even talk about FoxconnTechnology Group’s addiction to Apple’s iPhone. After all, admitting you have a problem is the first step to solving it.

Over at FoxconnIndustrial Internet Co, a smaller unit thatrecently went publicin Shanghai, the dependence on iPhones is evident. Its three largest single orders last year were from Apple, totaling$7.5 billion, for smartphone frames and outer casings.

Data from last year, and the first quarter of this year, show encouraging signsGoumay be kicking the habit.

While revenue atiPhone assembler Hon Haiclimbed 8% in 2017, orders from Applegrew just 1.8% , according to my calculations. In other words, other clients were contributing more to Foxconn’s top line. Hon Haiis the largest member of the Foxconn group, and is a controlling shareholder of its affiliates including FII.

Reliance on Apple isn’t over yet, though.

More than 51% of sales still came from Apple last year, down from 54.2% in 2016. Yet first-quarter 2018 figures point to an even bigger decline: Only 45% of revenue was due toits largest customer, the lowest for that period since at least 2013.

Since the iPhone is highly cyclical, and the latest release showed weakness, it’s important to be cautious about extrapolatingtoo much from just one quarter. That said, data from past years showthat when first-quarter Apple contribution dipped, so too did thefigure for the entire year.

If this is indeed a trend,we might see revenue contribution from Apple fallbelow 50% for the first time in six years. That would be just what the doctor ordered.

First Published: Jun 22, 2018 10:46 IST