Hon Hai reports first sales dip on record amid iPhone slump

Thursday, January 12, 2017
By Christine Chou, The China Post

Hon Hai Precision Industry Co., also known as Foxconn, announced Wednesday that its annual sales declined in 2016 — the first time it has dipped since it went public in 1991.

The company's sales dip has been blamed on slow demand from its biggest client Apple, after the global smartphone market went through its worst year on record.

Hon Hai posted a 2.8 percent fall in 2016 sales to NT$4.36 trillion (approximately US$136.5 billion), the company's filing to Taiwan's stock exchange read.

In December, however, it posted 9.76 percent growth year-on-year attributed to strong demand for the iPhone 7 Plus.

Hon Hai's unprecedented sales drop was largely driven by Apple's first revenue fall since 2001.

Hon Hai has been taking steps to expand into sectors such as automation, cloud services, and the internet of things. However, its revenue stream remains heavily reliant on Apple product sales.

The world's largest contract electronics manufacturer gets about half its revenue from assembling Apple's iPhones and iPads.

Chairman Terry Gou (郭台銘) is scheduled to host the firm's year-end party at Taipei Nangang Exhibition Center on Jan. 22, during which he is expected to reveal their future plans and strategies.

Apple has cut Tim Cook's 2016 pay by a little over US$1.5 million after the company failed to achieve both revenue and profit goals. Cook's compensation was cut from US$10.28 million in 2015 to US$8.75 million in 2016, according to The Wall Street Journal.

“Apple said its annual sales of US$215.6 billion were 3.7 percent below its target of US$223.6 billion, and its operating income of US$60 billion was 0.5 percent short of the US$60.3 billion target. As a result, company executives got 89.5 percent of their targeted annual cash incentive,” said the report.

Hon Hai is reportedly considering setting up a new business entity in Indonesia, the Indonesian newspaper Indonesia Shang Bao cited Hon Hai's regional manager Sukaca Purwokardjono as saying on Thursday.

The report said Hon Hai plans to separate its subsidiaries Luna and Sharp and would make a formal announcement within three months.

Last month, Apple reportedly committed to a US$44 million investment to open a new research and development center in Indonesia within next few years.

The Taiwanese firm declined to comment on whether Apple had approached Hon Hai to assist its move to the country.

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