Foxconn’s profits see largest drop since recession as iPhone X production stalls

Foxconn’s profits fell to $700 million last quarter, a 39 percent year-over-year decline from the $1.09 billion it pulled in during last year’s third quarter. It’s the Taiwanese assembler’s largest drop since the global recession, and it’s all due to the initial iPhone X production problems, as Foxconn relies on Apple for more than half of its business.

As first reported by Bloomberg, Foxconn, the sole assembler of iPhone X devices, was unable to assemble as many iPhone X phones as it needed to stay profitable due to a lack of parts. Not enough suppliers make OLED displays, and many struggled with the technical process of constructing the Face ID unit. Earlier last month, defective units from faulty Face ID parts sparked iPhone X production reports that Apple would only ship 20 million units, or half of what was planned.

Making iPhone X devices caused Foxconn’s operating expenses to rise over 16 percent in Q3. And the easier-to-assemble iPhone 8 and iPhone 8 Plus models haven’t sold as well. Additionally, on the Asia front, Apple faces competition from companies like Huawei and Vivo, which produce cheaper, iPhone-like alternatives.

But there is hope yet for Foxconn, as people are still clamoring to buy the iPhone X. Currently, the iPhone X is backordered up to four weeks, according to 9to5Mac. Once those orders are filled, Foxconn may be able to recover from its low profit margins.