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Foxconn chairman discusses struggle to build iPhone 5
Citing incredibly high demand for the iPhone 5 and quality control difficulties, Foxconn Chairman Terry Gou told Reuters that his company's Hon Hai Precision Industry unit is struggling to assemble enough of the devices to meet Apple's requirements for the latest iPhone. Talking to reporters after a business forum, Gou said, "It's not easy to make the iPhones. We are falling short of meeting the huge demand." Some brokerage firms have reported that another Foxconn subsidiary, Foxconn International Holdings (FIH), is now beginning to build the units. Gou declined to comment. FIH normally assembles phones for manufacturers such as Huawei and Nokia. Several weeks ago, an anonymous Foxconn official told the Wall Street Journal that "the iPhone 5 is the most difficult device that Foxconn has ever assembled." Specifically, the aluminum chassis and in-cell touch panel displays have created production headaches. The anodized chassis has sometimes shown wear or scratches right out of the box, while yield rates for the displays were initially low. Failing to meet demand for the iPhone 5 during the critical holiday buying season could have a negative impact on Apple's earnings and share price. [via AppleInsider]
Foxconn reports $218 million full-year net loss, worse than analysts' expectation
Foxconn, the mega-manufacturer behind many popular gadgets, posted a $218.3 million net loss for 2010 yesterday. While the company had previously predicted lower earnings amid suicide-related wage increases and welfare costs, the reported figure is still worse than analysts' estimation of around $202 million, which also far outweighs the prior year's $38.6 million profit. Foxconn puts the blame on higher consolidated income tax and increased competition, as well as "cost streamlining actions" -- a reference to the ongoing relocation and expansion plans, which are also the outcome of the Chinese suicides -- that took longer than expected and led to increased spending along with higher manufacturing overhead. As for 2011, Foxconn said it'll "take decisive actions to conclude our capacity relocation, optimize our cost structure and return to profitability." Of course, further losses could accelerate plans to increase prices, which could ultimately put everyone in a lose-lose situation if Foxconn can't compete. Excerpts from the financial report can be found after the break.
