Taipei-Taiwan-based manufacturing giant Hon Hai Precision Industry Co., an iPhone assembler for Apple Inc., posted its highest-ever monthly revenue in November due to rising shipments of the premium iPhone X.
Market analysts said solid demand for the iPhone X, the signature model for the iPhone 10th anniversary, is expected to continue to boost Hon Hai's sales for the fourth quarter to a new high.
In November, Hon Hai, also known as Foxconn in the global market, recorded NT$569.60 billion (US$18.99 billion) in consolidated sales, a new high for the company.
The sales report dismissed recent market worries over demand for the iPhone X and the technology bottlenecks the Taiwanese supplier faced in assembling the gadget due to a significant upgrade in specifications.
The November figure was up 17.33 percent from a month earlier and up 18.5 percent from a year earlier.
Hon Hai said its consumer electronics operations saw the strongest growth momentum in November with analysts attributing the strong sales to the launch of the iPhone X, while sales of the communications devices the company makes for other brands stayed little changed from a month earlier and revenue from the computing devices it manufactures trended lower.
In September, Apple unveiled three new iPhones: the 5.8-inch iPhone X, the 5.5-inch iPhone 8 Plus and the 4.7-inch iPhone 8.
Hon Hai is believed to be the sole assembler of the iPhone X, which went on global sales on Nov. 3.
In a research note, KGI analyst Kuo Ming-chi, who has a record of accurately predicting Apple's moves and assessing the fundamentals of its suppliers, said Hon Hai has made a significant improvement to resolve iPhone X's technological bottlenecks in recent weeks.
Kuo said Hon Hai is shipping 450,000 to 550,000 units of the iPhone X each day, compared with 50,000 to 150,000 per day a month or two ago.
The technology bottlenecks related to the iPhone X hurt Hon Hai's profit margin in the third quarter, although its net profit for the July-September period rose 17.61 percent from a year earlier, which analysts attributed largely to returns on its non-core business investments.
After the November sales data, analysts said the iPhone X is expected to continue to serve as a driver to Hon Hai's sales growth for December to boost revenue for the fourth quarter to top NT$1.5 trillion and even to challenge NT$1.55 trillion, which will be up more than 40 percent from a quarter earlier.
Analysts said the effect from the iPhone X is expected to continue into the first quarter of next year.
However, a U.S.-based brokerage said the benefits of the iPhone X had been factored into Hon Hai's share price so that the stock came under downward pressure in recent sessions at a time when U.S. tech stocks took a beating and due to previous concerns over the iPhone X shipments.
The brokerage said Apple will likely place more orders to Pegatron Corp. and Wistron Corp., another two Taiwanese iPhone assemblers, by cutting orders to Hon Hai next year.
The securities house has lowered its target price on Hon Hai shares to NT$90 from NT$105, while leaving a "neutral" recommendation unchanged.
On Friday, Hon Hai shares closed unchanged at NT$93.70 on the Taiwan Stock Exchange, where the weighted index ended up 0.41 percent at 10,398.62 points.
Source: Overseas Community Affairs Council