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First-quarter earnings at Hon Hai Precision Industry Co. show that Apple Inc.’s chief product assembler pumped $2bn more into its supply chain than a year earlier.
Weak iPhone sales can’t be blamed for Hon Hai’s net income slipping 15 percent and missing estimates, because they weren’t weak. Revenue at the Taiwanese company was up 5.5 percent for the March quarter, the fastest growth for that period since 2015, and data that was known a month ago. At Apple, which accounted for 51 percent of Hon Hai sales last year, it climbed 16 percent for the three months.
Instead, Hon Hai’s cost of goods sold (COGS) rose, dragging the firm’s gross margin down by 117 basis points. That’s not great news for Hon Hai, but it’s good for its employees, equipment makers and the dozens of component sellers that benefit from the greater largess.
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