Foxconn Electronics (Hon Hai Precision Industry) reported their revenues for May yesterday which revealed that they slipped 10.82% year over year. Foxconn attributed the downturn to seasonality but analysts saw it differently.
Analysts and market watchers pointed out that Foxconn's revenues dropped in part because its clients will release new products in September and are currently in the middle of a transition. The other factor that Foxconn was reluctant to point out is that Wistron won contracts from Apple for their 4-inch iPhones as the real reason behind the impact on their performance.Though in the bigger picture, there was a positive reason for losing some production to Wistron.
Today's report out of Taiwan supports our May report which stated that Wistron won a contract to produce Apple's current line of 4 inch iPhones so that Foxconn could focus on delivering Apple's new 4.7 and 5.5 inch iPhones for this fall.
Foxconn has won the contract to produce 70% of the next generation iPhone with a 4.7 inch display. Foxconn begins production of the new 4.7 iPhone in July at their Zhengzhou plant in China. The 5.5 inch iPhone is expected to begin production at Foxconn in August.
So the dip in Foxconn's revenue in May will be made up later this year with greater profits generated by the production of larger iPhones in the coming months.