Hon Hai Precision Industry Co., the assembler of most of the world’s iPhones and iPads, reported high quarterly profit, indicating solid demand for the iPhone 11 range.
The company posted net income of NT$30.7 billion ($1 billion) for the September quarter, compared with an average estimate of NT$27.7 billion. The company also reported NT$1.39 trillion in sales for the September quarter.
Apple last month forecast holiday revenue that surpassed projections, suggesting high sales of the iPhone 11 models. It’s now said to expect iPhone shipments to return to growth in 2020 when it finally introduces its own 5G devices.
AirPods, Apple Watch, HomePod and other devices made in China have been hit with 15% tariffs, and U.S. President Donald Trump hasn’t ruled out the possibility of a levy on iPhones starting Dec. 15.
Hon Hai, which gets half its revenue from Apple, is now diversifying away from its main Chinese production base to mitigate the impact of potential U.S. tariffs. It’s spending more than NT$17 billion building factories in India and Vietnam, Chief Financial Officer David Huang said at an earnings conference. Those two countries will become regional manufacturing hubs, he added.
Billionaire founder Terry Gou has also promised to shift jobs and production into the U.S. Gou has said he intends to press ahead with construction of a display panel factory in the state of Wisconsin, an endeavor once tagged as a $10 billion investment but that has fallen far behind schedule. Vice Chairman Jay Lee said that project was “‘on track.” Hon Hai has completed initial construction on the first, main factory and the company will also target the defense and aviation markets with its panels, he added.
Hon Hai executives forecast a rebound in consumer electronics demand in 2020.
Chairman Young Liu said the firm’s goal is to achieve 10% gross margins within three to five years.