Foxconn’s May sales drop 9.5% y/y on smartphone weakness

TAIPEI (Reuters) – Taiwan’s Foxconn, the world’s largest contract electronics maker and major iPhone assembler for Apple Inc (NASDAQ:), said on Monday that revenue in May fell 9.5% year-on-year due to weakness in smart consumer electronics during the traditional low season.

Foxconn, formally called Hon Hai Precision Industry Co Ltd, said revenue last month reached T$450.7 billion ($14.7 billion), in line with its expectations, though it was up 5% compared with April.

For smart consumer electronics products, which include smartphones and are the company’s main business driver, revenue in May dropped as it entered the “traditional slow season” and coming off a high base, the company said in a statement, without elaborating.

Business in the second quarter is expected to decline due to a high base last year and “the seasonal off-peak period” amid a transition between old and new products, it said, offering an unchanged outlook from the previous month.

The first half of the year is traditionally slower for Taiwan tech manufacturers as major electronics vendors including Apple launch new products near the year-end holiday season.

Apple results for the quarter ended April 1 beat expectations, helped by better-than-expected iPhone sales and inroads in India and other newer markets.

However, Foxconn posted a 56% plunge in first-quarter net profit, lagging forecasts in its biggest quarterly fall in three years. It took a $565 million write-off linked to its 34% stake in Japanese electronics maker Sharp (OTC:) Corp and said visibility for the full year was limited.

But Foxconn said last week artificial intelligence applications would strongly drive demand for its server business this year though it reiterated its 2023 overall performance would be a flat one for the company on global economic woes.

Foxconn shares have risen 7.6% so far this year, lagging the broader Taiwan market, which is up 18.2%. They closed down 0.5% on Monday, compared with a 0.1% gain for the broader market.

($1 = 30.7040 Taiwan dollars)