After seeing a decline in the first half, HSBC has stated that the electronics manufacturer is dependent on Apple for a rebound in the second half.
Foxconn’s parent company Hon Hai has reported that sales dropped by nearly 16% compared to the previous year. HSBC has commented that the electronics manufacturer’s ability to rebound in the second half of the year depends on Apple and the performance of the next iPhone and iPad. “By leveraging these new products, Hon Hai would be well positioned to grow its second-half revenue by 30 percent from the first quarter,” says Jenny Lai, head of equity at HSBC Securities, “The iPhone is particularly important because analysts’ consensus forecast suggests 50 percent growth in unit shipments in the second half from the first half, and it is one of Hon Hai’s highest-margin products”
Hon Hai is the world's largest electronic's manufacturer
Hon Hai’s losses have been notable. Between January and the end of April, their revenue was NTD 1.1 trillion (USD 36.9 billion) as compared to the NTD 1.3 trillion reported last year for the same period. However, the 16% drop is an improvement from the 19% drop exhibited during the first three months of the year. Apple is Hon Hai’s biggest customer, expected to be responsible for 40% of the company’s revenue this year. As such, their performance can affect the overall performance of the manufacturer and a fast product roadmap for Apple’s new devices can help reduce the losses for Hon Hai. “The new retina display for the retina iPad mini is experiencing production yield rate issues, which means that unit volume could remain low until October,” Lai said. “Meanwhile, the low-cost iPad mini is facing a bottleneck in reducing costs in the design and manufacturing processes to meet the original budget, which may delay its launch.”