12 October 2018
Global smartphone sales have seen a slowdown which has led to razor-thin profit margins for suppliers and makers. The slowing smartphone demands at the global level as well as customers holding onto their older devices longer have led to several major players like HTC and Sony to reassess their place in the market. According to a new report, component maker Foxconn is now scaling back its mobile business.
Foxconn is one of the leading manufacturers of Android devices and owns a 62% majority stake in FIH Mobile. The company has been trying to withstand the impact of the deepening industry slump on second-tier smartphone brands which are a prominent part of its client list. FIH Mobile is now scaling back its mobile business and moving into next-generation automotive electronics. The company has reportedly transferred hundreds of engineers and other resources from its Android operations to a newly established automotive electronics project. Nearly 90% of FIH’s revenue is from its Android division and the company had recorded a net loss of $857 million last year.
FIH Mobile’s make clients include Google, Xiaomi, Sharp, Gionee, Lenovo, Nokia, and Meizu. Its Google’s contract is reportedly profitable for FIH, and the company is not quitting the industry completely but is holding on to selective clients.
The Chinese smartphone clients are reportedly a big problem for FIH Mobile, as they pay slowly and rarely provide reliable production forecasts leading to losses. FIH Mobile is also letting go of HMD Global/Nokia orders due to poor margins. The intense competition in the smartphone market is definitely taking a toll on smartphone makers and suppliers globally.