Foxconn profits plummet 39% following iPhone X production woes

Apple manufacturing partner Foxconn this week posted a 39 percent year-over-year decrease in net profit, losses that industry watchers attribute to the difficult-to-assemble iPhone X, which remains in limited supply.

Foxconn's earnings reflect its September quarter, when production of the iPhone X was ramping up but the handset was not yet shipping. Its profits fell to 21 billion New Taiwan dollars, or about $695.5 million U.S., according to The Wall Street Journal.

The year-over-year decline was greater than analysts had expected, with estimates pegging the quarter at about NT$35.6 billion.

Revenue, however, was about flat with the year prior, at NT$1.1 trillion.

Foxconn is Apple's assembly partner for the iPhone X, which officially launched on Nov. 3. New orders are scheduled to ship in 3 to 4 weeks, reflecting demand that continues to outstrip supply.

Apparent production issues are said to be the fault of the forward facing TrueDepth camera, which powers the Face ID biometric authentication system replacing Touch ID. The camera is said to be composed of two key parts dubbed "Romeo" and "Juliet," and "Romeo" parts are more difficult to manufacture, leading to an imbalance in supply.

Apple gave the iPhone X more lead time to allow Foxconn to ramp up production — it launched six weeks after the iPhone 8 and iPhone 8 Plus. Given that iPhone X orders have been shipping sooner than advertised, there are some suggestions that Apple has addressed many of the manufacturing issues it faces, and those improvements at the supply chain level could be reflected in Foxconn's December quarter.

12 Comments

spice-boy 1450 comments · 8 Years

About 7 years ago

Expect more manufacturers to have set backs as companies like Apple keep pushing for more advanced components to stay on top.

maestro64 5029 comments · 19 Years

Those numbers do not add up. If operation costs increase that much in the last few week of Q3 just for the iPhone X to impact the bottom line by 40%, that means they were taking a loss on every iPhone x they shipped. Foxconn operating margins are low double digits to single digit. There has to more going on then the iPhone being harder to assemble. Foxconn would not just eat this they would have pass it along to Apple especially if there was yield issue on parts as rumors have been saying.

gatorguy 24609 comments · 13 Years

maestro64 said:

Those numbers do not add up. If operation costs increase that much in the last few week of Q3 just for the iPhone X to impact the bottom line by 40%, that means they were taking a loss on every iPhone x they shipped. Foxconn operating margins are low double digits to single digit. There has to more going on then the iPhone being harder to assemble. Foxconn would not just eat this they would have pass it along to Apple especially if there was yield issue on parts as rumors have been saying.

I tend to agree with you. Foxconn sells Apple a completed iPhone (which is why it's considered a Chinese import). Apple sells Foxconn many (most?) of the components that go into building it. Doesn't seem like only one of the two would be taking all the hit for build problems.

seanismorris 1624 comments · 8 Years

spice-boy said:

Expect more manufacturers to have set backs as companies like Apple keep pushing for more advanced components to stay on top.

I don’t think they expected demand for the X to be so elevated, and 8 muted.

The manufacturers were probably positioned to volume produce the 8, and it was expensive to switch to the X.

This really isn’t that big a deal for Apple, besides delaying sales slightly as customers waited on the X.

anton zuykov 1056 comments · 9 Years

maestro64 said:

Those numbers do not add up. If operation costs increase that much in the last few week of Q3 just for the iPhone X to impact the bottom line by 40%, that means they were taking a loss on every iPhone x they shipped. Foxconn operating margins are low double digits to single digit. There has to more going on then the iPhone being harder to assemble. Foxconn would not just eat this they would have pass it along to Apple especially if there was yield issue on parts as rumors have been saying.

They probably did, since iPhoneX costs 1000 and not 650-700 as those models that Foxconn assembled prior to X model.