Don’t blame Apple for Foxconn’s weak pre-pandemic quarter

Apple’s sales rose in the December quarter as Foxconn’s fell — before Apple shut its stores and Foxconn its factories

From “Apple Supplier Foxconn’s Profit Drops in the Fourth Quarter” ($) in Monday’s Wall Street Journal:

Foxconn Technology Group’s net profit fell 23.7% in the fourth quarter before the coronavirus pandemic struck the world’s biggest contract electronics assembler and its largest customer, Apple Inc…

Apple’s revenue rose 9% in the December quarter to $91.8 billion, driven by blossoming sales of devices and services connected to the iPhone. Sales of iPhones, which account for more than half of its revenue, rose 8% to nearly $56 billion…

Apple has been hurt on a number of fronts by the coronavirus pandemic. In China, where the health crisis began, Foxconn and other suppliers closed factories, which eroded iPhone supplies. Apple also had to shut down its stores there. As the epidemic reached Europe and the U.S., Apple shuttered stores and halted nearly all activity at its Silicon Valley campus..

My take: Note that the last paragraph describes events that occurred after the close of the December quarter. Foxconn didn’t offer an explanation for its December shortfall, but that didn’t stop the Journal from drawing its own conclusions.

4 Comments

  1. David Emery said:
    One possible cause/contributor would be substantial retooling costs for new products. If Foxcon was in the middle of retooling when the shutdown occurred, that would really hurt, with a continuing cost to finish the retooling once they’re back open.

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    March 30, 2020
  2. Fred Stein said:
    What we learned: Kubota-san is not a good journalist.

    In June of last year, Apple started to diversify outside of China. Apple uses other contract manufacturers, not just Foxconn. The last quarter of 2019 says nothing about the future of Apple. Foxconn revenue was down only 3.8% even though profitably was down 23.7%.

    2
    March 30, 2020
  3. Gregg Thurman said:
    Opinions are no longer reserved for the back page. Now they are incorporated into faulty news articles and presented as pseudo fact.

    It shouldn’t be any wonder why I don’t subscribe to anything “newsy”. Nothing changes in the stories except the dates. Given the quality of their work product I’m surprised journalists get that right.

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    March 30, 2020

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