Yesterday, two Apple suppliers delivered their earnings reports, with quite different results. The reports saw a significant increase in Foxconn profits as Japan Display hit five straight years of losses.
While the fortunes of Foxconn are closely tied to those of Apple, despite, rather than because of, the Cupertino firm, its strong performance in Q3 may be.
Apple recently reported a 9.2% drop in revenue from the iPhone. But while Foxconn relies on the Cupertino company for about half of its revenue – the iPhone which counts for most of it – the contract manufacturer saw its own sales hold steady, while profits grew 23%.
The WSJ reports.
The WSJ reports. Just as Apple managed a small profit boost despite dropping iPhone sales due to growth in wearables and services, Foxconn is likely to make up for decreased iPhone demand by products made for other companies as well as its own subsidiaries.
It is unclear whether this good fortune will continue. Foxconn is already facing an expensive solution to a legal problem related to Apple, and further threats may arise in the future. As of December 15, iPhones imported from China into the US will be subject to 15% tariffs, creating pressure on Apple to move some US model production to other countries.
Meanwhile, Japan Display reported another loss, resulting in straight losses for five years. The company also manufactures displays for the remaining LCD models from Apple and has been awarded a contract for Apple Watch’s OLED screens, but iPhone OLED orders have yet to be received.
Reuters notes that Japan Display is even more dependent on Apple for its revenue.
The company also relies on Apple for a cash injection, as well as favorable terms of payment to help it weather the storm.
There’s light on the horizon, however.