Hon Hai Sets Sales Record Thanks to Strong 5G iPhone Demand

(Bloomberg) -- Main iPhone assembler Hon Hai Precision Industry Co. reported higher-than-expected quarterly revenue thanks to robust demand for Apple Inc.’s new 5G devices.

The Taiwanese company’s sales in December totaled NT$713.8 billion ($25.5 billion). Revenue in the quarter reached a record NT$2 trillion, according to Bloomberg News’s calculations based on previously released monthly sales figures, beating the average estimate of NT$1.8 trillion. Hon Hai rose as much as 4.8% in Taipei Wednesday to its highest in more than two years, after Citigroup raised its earnings estimate and target price on the company.

The strong showing from Apple’s most important production partner suggest demand for the U.S. giant’s latest devices may have surpassed initial expectations. The world’s most valuable company outperformed the biggest tech corporations in 2020 on the strength of its 5G iPhones, a crucial indicator of whether consumers will adopt the much faster but pricier technology in 2021.

Wall Street has grown increasingly bullish on Apple’s prospects in the coming year with analysts projecting that a recovering economy will fuel even more demand for iPhones, wearables such as Airpods and services. Wedbush analyst Daniel Ives wrote Asia supply-chain checks “have now exceeded even our ‘bull case scenario’ for units in FY21 given the current trajectory, a major positive for shares over the coming months.”

Hon Hai is the exclusive assembler of the top-of-the-line iPhone 12 Pro and iPhone 12 Pro Max. Its sales for 2020 came in at NT$5.4 trillion, up slightly from NT$5.34 trillion in 2019 after Covid-era demand for connected gadgets offset a global economic downturn. Chairman Young Liu has said he expects Hon Hai sales to grow by single digits in 2021, while its automotive-related business will be “very good” in the first half.

The Taiwanese company’s shares gained more than 13% in the first two trading sessions of the year, propelled further by news it had sealed a manufacturing deal with embattled Chinese electric-vehicle startup Byton Ltd.

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