Foxconn International posts worst-ever 1H losses

Summary:The world's largest contract manufacturer for handsets has reported a net loss of US$226 million in the first half of 2012 due to shrinking orders from tier-two mobile brands.

Foxconn International Holdings (FIH) has reported a net look of US$226 million for 1H2012, compared with a loss of US$18 million for the same period last yea.

In a a statement to Hong Kong stock exchange on Monday, the world's largest contract manufacturer for handsets attributed the huge loss to sluggish orders from its clients including Nokia. 

In the first six months this year, it saw major changes in the handset ecosystem triggered by the end market volatility due to the European and global economic slowdown, according to the statement.   

New service and applications centric business emerged in the market, while FIH's clients were continuously battling for market share amid fierce competition, said the company. 

FIH's parent Foxconn Technology Group helps assemble Apple's products including iPhones and iPads, but FIH itself does not. Its loss was mainly due to falling orders from major clients including Nokia, Motorola and HTC.

Apart from Apple and Samsung, nearly all vendors posted disappointing results in the first half. As FIH's clients mostly are using Android systems in their mobile phones, Samsung's loss in the Apple patent lawsuit may "further hit the sales of mobile phone sales with Android systems", said a local Chinese report.

The total number of FIH employees had been decreasing over the years, signifying the reduced orders. As of end-June 2012, the group had a total of 75,500 employees compared with 98,900 in 2011. In 2010, the number had reached 112,500.

Looking ahead, FIH warned "challenging economic conditions around the world may continue to cast uncertainties in our business environment".

Shares of the Hong Kong-listed company dived 8 percent after it posted the dismal 1H2012 result on Monday, compared with the 0.1 percent loss of the benchmark Hang Seng Index.

Topics: Tech Industry, Apple, China, IT Employment, Mobility

About

Cyrus Lee, writing under a pen name, is a Hong Kong-based reporter in an English-language newspaper and a correspondent for a radio station.

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