Key Apple Partner’s Stock Tumbles, China’s Scrutiny
Following the launch of Beijing’s investigation into the globe’s biggest iPhone assembler, Hon Hai Precision Industry, its October sales dropped, and Foxconn’s shares took a tumble of $35.45 billion, a decline of 4.6% in revenue.
The probe spells trouble for Apple as Hon Hai Precision is Foxconn’s public arm of the business, and Foxconn is considered one of Apple’s most valuable partners.
Despite the investigation, Foxconn says they have a “significant growth outlook” for the last quarter, which is usually Hon Hai’s busiest time due to iPhones year-end shipments.
“Operations will ramp up sequentially,” the company said.
Complicating matters for Apple and Foxconn is that China represents a huge market for both companies.
With the China investigation beginning, shareholders are concerned about revenue while potential trouble is brewing in a market that accounts for about a fifth of Apple’s sales.
The hostility between the U.S. and China is only adding complications to an already complex relationship.
Experts say the country’s consumer economy is wobbling, partially because U.S. businesses experience a progressively more hostile environment.
Additionally, Huawei launching a smartphone with an innovative made-in-China 5G processor also took sales from the iPhone.
Despite Hon Hai saying it will work with authorities, shares of the company and Foxconn Industrial Internet have plummeted after the news of the probe was made public, dropping roughly $9 billion in value.
Additionally, Taiwan is examining alleged bribes linked to Foxconn founder Terry Gou right about when he is planning to submit his presidential bid.