Contract manufacturing colossus Foxconn, best known for its ties to Apple in producing the iPod, iPad and iPhone devices, is reeling after a whopping reported full-year net losses of $218 million in 2010.
Hon Hai stated in a press release that intensifying market share struggles among global OEM brands has made the global handset EMS market difficult and caused pricing pressure for Foxconn's products.
"The year 2010 was an extremely difficult year for Foxconn," said the statement issued by Foxconn. "We saw major changes in the handset ecosystem triggered by entry of new players, introduction of new software and applications, as well as emergence of new business models. Market dynamics shifted drastically and created tough challenges for some industry players as well as the company."
The company added that higher manufacturing overhead resulting primarily from lower utilization of facilities and relocation, changes in product mix, impairment losses, continued long-term investment in research and development activities as well as higher consolidated income tax also affected financial performance.
Loss for the year 2010 attributable to equity holders of the company was US$218 million, representing a decline of 659% over the profit for prior year amount of US$39 million.
"Looking ahead to 2011, our alarming setback in 2010 has created a sense of urgency in the organization," concluded the company's press statement. "We need to change as the market is changing and our customers are changing. We need to take decisive actions to conclude our capacity re-location, optimize our cost structure and return to profitability."
