Apple iPhone 12 Pro Max camerasSource: Apple

What you need to know

  • Apple supplier Foxconn has posted lower-than-expected profits despite strong iPhone 12 sales.
  • Net profit of $1.6 billion was around 4% lower than the year before.

Apple supplier Foxconn has posted lower-than-expected profits despite strong iPhone 12 sales.

From Reuters:

Foxconn, the world's largest contract electronics maker, posted on Tuesday a lower fourth-quarter profit that lagged expectations despite strong iPhone 12 sales and pandemic-led demand for telecommuting devices. The Taiwanese firm, which counts technology giants such as Apple Inc among its major clients, booked a October-December net profit of T$45.97 billion ($1.61 billion).

Those figures represent a 4% decline on the previous year, however, revenue rose 15% year on year. According to the report, that was mainly driven by a "more than 15% revenue increase on the year" from consumer electronics including smartphones. Looking ahead, Foxconn seems hopeful:

Foxconn had also said it expected revenue to grow about 10% in 2021 thanks to "stronger than expected" sales for smartphones, including the new iPhone 12, as well as telecommuting devices amid a coronavirus-induced work-from-home trend.

Foxconn beat its Q3 expectations thanks to robust iPhone 12 demand at the start of the year, and the company was recently given the go-ahead to build a shiny new plant in Vietnam as it diversifies its operations at the behest of Apple. Vietnam will become a home of some MacBook and iPad assembly. The news comes despite reports from 2020 that the relationship between Foxconn and Apple was "eroding", causing Foxconn to employ "questionable tactics" in a bid to grow its earnings, from October:

According to the report, Foxconn's single-digit profit margins are causing the company to "employ questionable tactics" in order to grow its earnings.

Foxconn has apparently been dishonest with Apple about the number of employees it has hired as well as used Apple's own equipment to make devices for its rivals.

For manufacturing projects, Foxconn routinely tells Apple that it hired more workers than it actually did. Foxconn has also used Apple-owned equipment when making devices for Apple's rivals, and has taken shortcuts on component and product testing. As a result, Apple has increased monitoring and tracking of Foxconn employees and its equipment that's in Foxconn facilities.