Firm’s reliance on major client adds to its vulnerability
Hon Hai Precision Industry Co, the manufacturer of Apple Inc’s iPhones, posted its first annual revenue decline since 1991, as it wrestled with a saturating global smartphone market.
The Taiwan-based firm said on Tuesday it recorded NT$4.36 trillion ($137 billion) in revenue in 2016, down 2.81 percent from a year earlier, after its biggest client Apple saw slowing iPhones sales.
Founded in 1974 by business tycoon Terry Gou, Hon Hai, also known as Foxconn Technology Group, is the world’s largest contract manufacturer of consumer electronics. Apple accounts for half of its business.
James Yan, research director at Counterpoint Technology Market Research, said smartphone vendors and their supply chain partners are under big pressure as the global smartphone market slows down.
“Hon Hai’s heavy reliance on Apple makes it extremely vulnerable to a single client’s sales performance,” Yan said.
In 2016, the global smartphone market was expected to grow by 0.6 percent yearon-year, far lower than the 10.4 percent growth rate in 2015, research firm International Data Corp estimated.
Hon Hai’s decline came aft- er Apple reported in October its first annual revenue dip since 2001. The US tech giant finds it increasingly hard to resonate with consumers in China, the world’s largest smartphone arena where local players Huawei Technologies Co and Oppo Electronics Corp are gaining ground.
Nicole Peng, research director at Shanghai-based consultancy Canalys, said although Chinese brands such as Huawei and Oppo have also turned to Hon Hai to assemble smartphones, they only