Slumping Smartphone Orders: Foxconn International Feels The Heat, Posts Worst Ever H1 Net Loss

by Gaurav Kheterpal on August 29, 2012

Foxconn and trouble go hand in hand. Last May, the dysfunctional Foxconn family faced a testing period as an explosion rocked one its factories outside Chengdu, China, killing three (underpaid) employees. Since then, the company has been subject to loads of bad press owing to concerns over inhuman working conditions at its Chinese factories producing the most sought after technological devices and gadgets.

Though Apple has repeatedly tried to address public concerns via audits and Foxconn has highlighted its Brazilian factory as a fair labor model, the truth remains – the general public at large still thinks of the company as an inhuman employer.

And when you think that it can’t get any worse for the company, Foxconn International (FIH) has put its worst-ever first-half net loss down to ‘sluggish orders’ from key clients, such as Nokia and Motorola. So much so, the company has been forced to lower its outlook for the rest of the year and focus on cutting costs in the handset sector, owing to cut-throat price competition in the smartphone segment.

FIH’s major clients include Nokia and Motorola. The company issued a warning in April that its first-half loss would widen because of rising costs and keen price competition in the smartphone sector. Its parent company Foxconn Technology Group helps assemble Apple Inc’s iPhones and iPads. FIH has already witnessed its first reduction in average labour costs in 3 years because it moved some factories to northern China.

“Looking forward, challenging economic conditions around the world may continue to cast uncertainties in our business environment,” said FIH. “The management team remains cautious over the future handset market conditions in 2012.”

FIH is now hoping for a reversal of fortune when Windows 8 launches October 26, Nokia is believed to be lining up multiple Windows 8 devices which should translate to increased business from Nokia.

The company’s share price fell more than eight per cent after investors gave it a thumbs down for poor performance. In July, FIH underwent a management reshuffle – replacing its CEO, appointing Executive Director Chih Yu Yang to take the helm. He replaced Cheng Tien Chong who quit after less than a year in office. The company has slashes thousands of jobs and employs 75,487 people as of June 30.

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Written by: Gaurav Kheterpal. Follow TheTelecomBlog.comby:RSS,TwitterFacebook, or YouTube.


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